(Image Credit: IMAGN) Autumn Barongan grocery shops for her family using her recently replenished EBT on Friday, Nov. 1, 2024, at Fareway in Winterset.
San Diego, California – California is implementing new chip-enabled Electronic Benefit Transfer (EBT) cards for its 3.2 million recipients of social services benefits, aiming to bolster security against rampant fraud. The California Department of Social Services (CDSS) hopes these cards, similar to standard debit and credit cards, will protect vital funds used for necessities like housing and food.
San Diego County, with 405,515 CalFresh participants, is among the first to receive the new cards, with distribution scheduled for completion by June. County officials assert the update will significantly reduce theft. However, fraud investigators argue the move is overdue and insufficient.
Over the past two years, San Diego County alone reported $34.6 million in EBT theft, reimbursed by taxpayers. Investigators, including Greg Mahony and Shawn Ferris of the California Welfare Fraud Investigators Association, criticize the state’s slow response and the new cards’ continued reliance on outdated magnetic strip technology.
“What I see is a rush to get out a chip card as fast as possible, and that will stop all the fraud,” Mahony said, emphasizing that the issue is far more complex. “And I’ve been raising my hand for years telling them: It is much more than that.”
Sophisticated international crime rings, particularly from Romania, have been targeting California’s benefit system. Last year, the U.S. Attorney’s Office in San Diego prosecuted seven foreign nationals for stealing $181 million in welfare funds. Recently, Romanian authorities, in collaboration with the FBI, apprehended 11 individuals for similar crimes.
Investigators claim the state’s current tracking methods significantly underestimate the true extent of EBT fraud. Reimbursements are capped, suspicious ATM withdrawals are excluded, and unreported thefts are not accounted for. “The state of California has no idea what the fraud rate is,” Ferris stated.
Despite warnings dating back to 2018, CDSS initially resisted upgrading the cards, citing cost concerns. The state eventually allocated $76.5 million for the transition, but investigators argue the new cards still possess a critical vulnerability: the magnetic strip.
While the chip provides enhanced security, the magnetic strip remains susceptible to skimming devices, allowing thieves to access account balances, card numbers, and PIN codes. Investigators consider this a significant oversight, calling the technology “20 years behind.”
CDSS defends the magnetic strip’s inclusion, citing federal welfare card regulations requiring compatibility with various retail systems. However, investigators believe the state should exceed these minimum standards.
Investigators also call for stricter eligibility verification, including mandatory face-to-face meetings and ID requirements. They stress their goal is to ensure benefits reach legitimate recipients, not to hinder access.
Victims of EBT theft face significant hardship, often waiting weeks for reimbursements, leaving them vulnerable to eviction and food insecurity. Investigators emphasize the urgency of addressing the issue, stating, “Somebody has to fight back.”
