- The Washington Times - Tuesday, July 6, 2004

A 40-year-old staple of life in poverty — the paper food stamp — was retired last week, replaced by electronic debit cards.

Government officials said they are hoping this new era in the food stamp program also will end one of the banes of its existence — the illegal trafficking of benefits.

For decades, food stamps were a “second currency” in poor neighborhoods and the mainstay of a black market once estimated at $1 billion a year. Recipients who wanted extra cash sold their coupons, often for 50 cents on the dollar.

With Electronic Benefit Transfer (EBT) debit cards, “the incentives [to cheat] are gone,” said Kate Coler, deputy undersecretary for Food, Nutrition and Consumer Services in the Agriculture Department. “It’s like a new beginning — a new era — for the food stamp program.”

With EBT, the food benefits are issued electronically to the low-income recipient, who uses a personal access code. The EBT card can be used only at food retailers with card-swipe machines. The card won’t “pay” for nonfood or unauthorized items.

“And it enables us to have an audit trail for all of the transactions, which we can monitor,” said Ms. Coler.

Despite the wide use of EBT cards in recent years, the technology hasn’t eliminated trafficking.

Between 1999 and 2002, about $395 million was lost to trafficking, mostly in small grocery stores, USDA research says.

But this was significantly less than the $656 million per year lost to trafficking between 1996 and 1998, and a far cry from the $1 billion in trafficking losses reported in the early 1990s.

EBT “changed the landscape” in food stamp fraud, said Jerry Friedman, executive director of the American Public Human Services Administration, a trade group for state welfare officials.

In the past, “food stamps were just like money,” he said. But with EBT, authorities can look for “lots of transactions in a short time or transactions with even dollar amounts.”

Small stores still may try to conspire with recipients to misuse EBT cards, personal identification numbers and point-of-sale devices, he said. However, once undercover officers catch cheaters in the act, “there’s a high rate of prosecution.”

The official announcement that the $20.7 billion food stamp program was switching from paper to plastic came last month. The term “food stamp” is going to be retired because it no longer applies to the program, and the USDA is seeking suggestions for a new name.

In addition to thwarting fraud and theft, changing to EBT ends the expenses of printing, mailing, collecting and shredding paper coupons.

EBT cards also help recipients because benefits are transferred electronically at the same time each month, eliminating problems with delayed mail or theft. Because EBT cards resemble credit and debit cards used by other customers, food stamp recipients no longer are “stigmatized” by their use of the odd-looking coupons.

“It’s kind of a dignity issue,” Mr. Friedman said. “Now you don’t have to go through the line with food stamps and be singled out.”

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