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Low-income Americans report seeing their benefits skimmed

There’s been a recent surge in skimming across the U.S. — with scammers targeting welfare programs that use payment cards that don’t come with fraud protection, like regular credit and debit cards do.

One such example is cash assistance — which low-income families like Chavez’s rely on — and another is the Supplemental Nutrition Assistance Program (SNAP), which helps folks purchase groceries.

Since late 2022, the federal government has spent at least $30 million reimbursing stolen SNAP benefits, according to data compiled by the Department of Agriculture, which manages the food stamp, or SNAP, program.

These programs use EBT cards, which bear a magnetic stripe that contains an account number and are cheaper to produce — but they aren’t as effective at protecting account information as the embedded chips that credit and debit cards use.

Thieves sneakily slip card skimming devices onto payment systems at ATMs, grocery stores and other locations that accept government-issued payment cards. When a card gets swiped through a reader, the skimming device reads and stores the card information, which the scammers can use to encode onto a duplicate card and drain folks of their much-needed funds.

“The lack of equal security for people with credit cards and people with EBT cards is disgraceful,” Andrew Kazakes, a lawyer at the Legal Aid Foundation of Los Angeles, told the Times. “It’s embarrassing that this inequity has persisted.”

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There are few options for folks who rely on government benefits

Experts say legislators need to do more to protect low-income families who depend on these benefits.

“This is a failure of government,” Betsy Gwin, a senior economic justice lawyer at the Massachusetts Law Reform Institute, told News 5 Cleveland.

“We know how to prevent many of these problems and to better protect low-income consumers,” she said. “And now is the time to do it.”

The federal reimbursement program only allows for a maximum of two months’ worth of benefits to be reimbursed, even if a household was robbed of more. It’s also slated to end in September of this year, unless Congress takes action.

“There’s a patchwork of replacement mechanisms across the country, and often families are waiting weeks, months, to receive those replacement dollars,” Gwin added.

Some states have introduced programs to start filling in the gaps, even if it means drawing from state funds. For example, Maryland passed a law expanding reimbursements for stolen food stamps and cash assistance last year. Meanwhile, California and Oklahoma are planning on piloting EBT chip cards this summer with the aim of reducing scams.

Other states are waiting on the federal government to take action. In March, bipartisan members of Congress introduced a bill that proposed rolling out chip-enabled SNAP cards and upgraded payment machines in small stores over a five-year timeframe.

Chavez told the Times that she feels anxious in the days leading up to when she receives her monthly benefits.

“I don’t want to find myself in that predicament [again] because I have little people that depend on me,” she said. “How do I look at my baby in her face and know that I might not have funds for her diapers?”

Chavez now stays up late every night her benefits are deposited so she can change her PIN at midnight and hopefully avert another scam from occurring.

“Only then am I able to rest. Only then am I able to get a good night’s sleep,” she admitted.

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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.

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