Vulnerable food stamp recipients are finding their cards empty due to hidden “skimming” devices that criminals plant on ordinary card readers, turning government assistance into a $1 billion-a-year ruse.
Haywood Talcove, a fraud prevention expert, has watched criminals turn ordinary card readers into what he calls “essentially an ATM for EBT card trafficking,” exploiting food stamp cards that still rely on outdated magnetic stripes instead of harder-to-clone chips.
EBT cards, the debit-card-style vouchers loaded with government dollars for food stamps, are slowly being overhauled to combat the illegal practice.
Scammers are able to misdirect the cash flow from government assistance programs to recipients simply by placing malware on point-of-sale terminals, the modern card reader that processes payments. These skimming devices capture a food stamp recipient’s information when they swipe their EBT card, and the data can then be encoded onto another card with a magnetic stripe.
Low-income families who did everything right — applied for, qualified for and received their Supplemental Nutrition Assistance Program benefits — are finding their accounts drained.
The U.S. Department of Agriculture’s Food and Nutrition Administration, which administers SNAP, is currently considering rule-making to increase SNAP EBT card security measures to protect against card skimming and card cloning.
If FNA does not implement and enforce stronger security measures, such as chip cards, the projected loss from fraud over the next two years could exceed $233 million, the USDA’s inspector general has estimated. Combined with the previously replaced benefits, that number would skyrocket to $555 million.
Mr. Talcove, CEO of LexisNexis Risk Solutions Government, agreed that the real remedy is to replace current EBT magnetic strip cards with chip-based cards — a step that USDA has slowly taken.
In November 2024, all states were alerted of the opportunity to implement EBT cards with chip technology. Alabama, California, Maryland, Massachusetts, Michigan, New Jersey and Oklahoma have issued EBT chip cards to participants, according to FNA. Efforts are underway in New York, Oregon, Virginia and Arkansas — the latter of which also launched an EBT-accompanying app.
Chips are effective at stopping counterfeit fraud because a one-time code to process the transaction cannot be reused — “a critical control to mitigate current SNAP fraud transaction schemes,” the USDA Office of Inspector General said in a January report.
More states are switching to chips, but Mr. Talcove suggested going a step further: a congressional or administrative mandate for states to implement chip cards, and threatening to withhold funding to those that do not comply.
States would cry overreach, he predicted.
“Now the states are going to complain. It’s going to cost money, but relative to the amount of money saved, and also the protection of the individuals who keep on getting their cards lifted by these groups, it’s actually a bargain,” he said.
Democratic Sens. John Fetterman of Pennsylvania and Ron Wyden of Oregon, and GOP Sen. Bill Cassidy of Louisiana, have introduced a bill to mandate EBT chip cards: the Enhanced Cybersecurity for SNAP Act. In the House, New York Reps. Dan Goldman, Democrat, and Mike Lawler, Republican, are leading the legislation.
Under the bill, states would have two years to begin issuing chip-enabled SNAP cards, four years to stop issuing new magnetic-stripe cards and five years to reissue all remaining ones as chip-only — all funded by USDA.
Both bills are stalled in committees.
But the “better move” is going digital, Mr. Talcove said.
Digitizing the cards — another of Mr. Talcove’s proposed solutions — rolled out as pilot programs in five states to switch to contactless mobile payments, allowing SNAP participants to scan or tap their phones instead of carrying a physical card.
First proposed in 2021, the pilot launched in 2023. Mobile payment methods will be available in Illinois, Massachusetts and Oklahoma in the next few years, but FNA confirmed that Missouri and Louisiana, both of which were among the five original states, are no longer participating in the mobile payment pilot.
Missouri did not move forward with the pilot due to the “significant implementation costs associated with upgrading internal systems and technical processes,” a Missouri Department of Social Services official said in a statement to The Washington Times.
Mr. Talcove also stressed the need to remove convenience stores that enable the trafficking of EBT cards from SNAP.
He has joined and documented multiple sweeps and noticed that EBT-friendly convenience stores had shelves stocked with expired food, and also encountered what appeared to be a laundromat masquerading as a convenience store.
“The USDA needs to do a better job in retailer integrity enforcement in convenience stores,” Mr. Talcove said.
USDA said it is disabling illegal retail point-of-sale devices and replacing retailer authorization numbers, a store’s identification assigned after undergoing the application process, that were identified as compromised.
FNA regularly monitors the transaction activity of about 261,000 SNAP retailers to identify patterns that may signal potential program violations, the department said. USDA may launch an investigation into an authorized SNAP retailer if they show an excessive number of suspicious transactions.
Investigators are sometimes deployed to attempt to buy items that are not allowed to be purchased with an EBT card, or they may attempt to exchange SNAP benefits for cash.
USDA also conducts periodic reviews of all SNAP retailers to ensure they continue to comply with program regulations. If violations are confirmed, retailers face disqualification from participating in SNAP, financial sanctions and fines or criminal charges and prosecution.
Secret Service sweeps have laid bare the proliferation of illegal skimming devices, serving as an EBT fraud enforcement tool for USDA and adding to the department’s own large-scale investigations.
Mike Peck, the assistant special agent in charge in the Secret Service’s Criminal Investigative Division, oversees the agency’s EBT fraud and ATM skimming outreach operations.
Secret Service analysts determine where the sweeps are and what is targeted in these operations, working with third-party card processors, banks and the state agencies that manage benefit programs, he said.
Of almost 70,000 POS terminal inspections in just over two years, 637 skimmers have been found and removed — a rate of just under 1%.
But what began as a one-time sweep in Las Vegas two years ago evolved into roughly 70 operations from Alaska to San Diego, Boston and Miami, in which 17,903 vendors have been visited in outreach operations.
For now, the solutions move on separate, uneven tracks that include retailer sweeps that catch skimmers after the fact, a chip-card mandate stalled in committee and a state-by-state rollout.
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