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Thumbs Up to a Tech Solution for EBT Fraud

Far too many politicians fear even the simplest measures to combat welfare scammers.

by
Timothy Imholt, Ph.D. and David Forsmark

Bio

June 18, 2013 - 3:00 pm

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We’ve been seeing a lot of breaking news about scandals lately, and they all seem to have one thing in common: The people at the top apparently didn’t want to know the truth behind the sordid stories.

Was the IRS harassing and suppressing President Obama’s political opponents? Nobody wanted to know. Why wasn’t a rescue operation mounted for our ambassador to Libya and the brave Americans who disobeyed orders to try to help him? People actively tried not to know. And what about the possibly illegal invasion of privacy into the lives of investigative reporters who inform the public about the government? Attorney General Eric Holder pretended not to know.

Since we began writing about welfare fraud and how to stop it, some have leveled the accusations that we are using scare tactics and demonizing the poor. That’s because those who depend on expanding government for their benefit don’t want to know, don’t want to stop it, and sure as heck don’t want you to know.

But while taxpayers are the ones fleeced by welfare fraud, the poor are also put at risk by a program that has no safeguards to ensure that the people who get the money are the ones it intended to help.

The good news is this problem can be solved easily and cheaply without unduly prying into the lives of recipients or treating them like suspects. We have the technology and skills to rebuild the system into one we can trust.

The bad news? Politicians, eager to develop constituents dependent on the government, aren’t particularly interested in reforming a defective system.

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Change is essential because we have witnessed an unprecedented swelling of the ranks of people whose grocery bills are being paid by the federal government. True, most of the rise in the aid rolls is due to the economic downturn, but a significant portion is due to the fact that the Obama administration is eager to increase the number of people receiving assistance.

Nobody would deny assistance to people who truly need it; virtually anyone can fall on hard times, and private charity cannot help in every case. Still, it is downright perverse for a government to create conditions that deliberately foster dependency. Some might say this transfer of wealth from the haves to the have-nots “levels the playing field” of society, but whom does it really help? Certainly not the taxpayers, who have less money for their own needs or for creating jobs. And not the poor, whose drive to self-reliance and independence is sabotaged by government largess.

The Daily Caller recently reported that 23,116,411 American households receive an average benefit of $274.30 apiece per month in Supplemental Nutritional Assistance Program (SNAP) benefits. Another 47,727,052 individuals are on SNAP, with each receiving an average monthly benefit of $132.86.

But that’s only part of the story. These numbers do not include Temporary Assistance for Needy Families (TANF), whose baseline budget is another $16 billion a year.

Altogether, the federal government disburses $6.3 billion every month — $76.1 billion a year — in welfare payments for just the SNAP program. Adding in TANF brings the totals to $7.6 billion per month and $92 billion per year. 

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In Massachusetts alone, we have heard about millions of dollars in benefits allegedly going to people who have moved from our state — but their EBT cards still came here for someone to misuse — while others were issued to dead people. Police report that nearly every drug dealer they arrest has a stash of other people’s EBT cards.

Sources say the incidence of fraud is as high as one in four beneficiaries. Unbelievable — but all too possible.

This means $23 billion per year — nearly $2 billion a month— is going into the hands of criminals and scam artists.

That’s almost twice the cost of the one-time federal bailout of Chrysler Corp., which Obama touts as rescuing the economy from collapse.

On top of everything else, these numbers don’t include the cost of unemployment or disability benefits, which are equally subject to abuse and deception. This also does not include the cost of the government employees who work to distribute these funds. A few quick calls and some Google searches and we discovered the cost of distributions is nearly 40%. This means that the total cost to the taxpayers is 40% higher than the actual cash distributions.

While the cost of fraud and abuse in benefit payments is enormous, the problem can easily be solved.

The Massachusetts legislature recently discussed one possible solution: Putting picture IDs on EBT cards. This would allow checkout-line clerks to immediately see if the person presenting the card is the rightful owner. This simple measure would block the use of stolen cards or those that remain in use after the original owner has died (a larger problem than you would think). It also would put the brakes on people who sell their cards for cash in order to buy alcohol or other prohibited products.

This seemed like a fantastic solution until lawmakers realized that self-checkout lines have become common in modern America. A scammer seeking to use an EBT card illegally could escape detection by using a lane unstaffed by a human clerk.

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There is, however, a better way to fight fraud. Today’s technology can put fingerprint scanners on something the size of a credit card; the chips and memory needed to operate the device easily could fit where the hologram is on most of your credit cards. Credit and debit-card swipe machines already can handle this, so there would be no cost to the store or extra hassle to the user to put this system into place.

This plan, if enacted, would solve a number of issues.

First, the system could be set up so no one gets two cards. If two cards have the same fingerprint, one — or both— could be deactivated.

Second, no one could sell his or her card for cash to buy drugs or alcohol. Only the person to whom it was issued could use the card. (In the case of shut-ins, the card holders could designate an authorized user to buy groceries on their behalf.)

Third, no one could use the identity of a dead person to defraud the system for years without challenge.

Our benefit system must be saved to continue to serve the truly needy. Our leaders must use technology — our most effective and efficient resource — to stop those defrauding the U.S. taxpayer. Fingerprint technology is here, can easily be implemented, and shouldn’t cost more than $10 per EBT card.

Stack up the one-time cost of $230 million for our proposed system against potential monthly fraud of nearly $2 billion. If you know of any other investment that will pay a 1,000 percent return on a monthly basis, please call us.

Before a politician challenges this idea because the numbers might be a little off, look at it this way: Even if the cost of implementation is 10 times higher than our estimate, the fingerprint card would pay for itself in one month. All subsequent savings would go to the taxpayers while assuring that the proper resources would go only to the truly needy. Keep in mind, too, that like all technological advances, this one will also get cheaper with time.shutterstock_102000970

Our problem is that far too many politicians vote against even the simplest measure to combat welfare fraud. They seem to believe it is better if thousands of scammers get undeserved money than for one deserving person to encounter an extra step in the process.

We’ve all seen the taxpayer-paid commercials aimed at recruiting an army of senior informants to spy on their doctors on behalf of the federal government. The pitch is simple and true: Stopping Medicare fraud makes Medicare stronger for everyone.

The same is true for eliminating welfare fraud. This will preserve the system for those who need it. Making the system more secure and reliable also will help remove any stigma attached to using an EBT card.

The only people who will be hurt are scammers, drug dealers, and other criminals who prey on the poor.

We can virtually eliminate EBT fraud without stigmatizing or investigating anyone — and without a million-dollar advertising campaign. We can do this with existing fingerprint software by using something everyone has: a thumb. Any politician who does not support this should have to explain why.

*****

images courtesy shutterstock / William Perugini /  Peshkova / Evgeny Atamanenko / Art Allianz

Timothy Imholt PhD is a veteran of the US Army (enlisted soldier), has a PhD in experimental physics, and currently works in the defense industry as an engineer. He is running for the United States Congress in the 3rd district of Massachusetts in 2014. He can be followed on Facebook under the name Imholt For Congress. David Forsmark writes regularly on books and culture for PJ Lifestyle.

Comments are closed.

Top Rated Comments   
EBT cards to the "poor" is a Democrat Gratis Program to their Urban constituancy...That fraud is RAMPANT in the program is a FEATURE not a bug.

And, every swipe card systems I've seen in the Philadelphia that accepts EBT cards, also are offers "Cash Back" when EBT users checkout, just like "regular" debit card holders...you buy a 1 dollar item, you "take" the maximum cash the store allows (usually $20, but Target and other large store chains allow up to $50)

The EBT system is NOT for food purchases, it is a CASH REWARD program with a minor inconvenience (the 1 dollar purchase) created to serve as a fig leaf.
1 year ago
1 year ago Link To Comment
The "Politicians, eager to develop constituents dependent on the government, aren’t particularly interested in reforming a defective system." (Read Democrats) don't want welfare reform for the same reason they don't want immigration reform. They want armys of people totally dependent on government for their survival. These people can be trusted to always vote for the party that gives them free stuff. Its either illegal alien women telling reporters how to get govenment assistance or welfare mothers raving over free phones, or its minority "political activists" voting 16 times in the same election. We have a whole sub-cuilture of completly dishonest, self-serving entitlement dependent freeloaders. And we have a political party that cares nothing about what is good for the country. They put party ahead of country and they receive cover and support from the media. Damn them all, they are destroying the most noble and benign country in the history of the world.
1 year ago
1 year ago Link To Comment
All Comments   (9)
All Comments   (9)
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I'm not interested in eliminating welfare fraud.


I'm interested in obeying the letter and intent of the Constitution, which means eliminating all federal welfare programs completely.

That pretty well takes care of the fraud problem, now, doesn't it?
1 year ago
1 year ago Link To Comment
Either the math or the reporting are wrong. SNAP-Families(23Mx$274): $76B, SNAP-individuals(48Mx$133): Also $76B, plus TANF: $16B equals $168B total paid out annually not $92B.

Just sayin
1 year ago
1 year ago Link To Comment
1984 again! Why do we have to continually resort to more intrusive identification systems when we have plenty of choices already to track fraud.

For example, in thinking about fairness, wage slaves get their W2 and independent contractors (if they're still working in this economy) get their 1099-MISC. EVERY government entity issues these IRS forms already. Should recipients of 'income, redistributed' get their 1099-GOV?

Facts are friendly!
1 year ago
1 year ago Link To Comment
FTA: ..."private charity cannot help in every case."

Why? Somebody please explain why private charity cannot do a better job of helping the truly poor and needy. Why is this idiotic statement an accepted premise?
1 year ago
1 year ago Link To Comment
You have Named the Unspoken! You shall be punished!


In fact, private charity used to do a pretty good job, but whether it can or NOT, how did this become a government issue?

1 year ago
1 year ago Link To Comment
Govt. fraud & abuse of Medicare, SSI, SSID, EBT, E-Verify can be solved immediately with the charge card companies managing these & other programs.
1 year ago
1 year ago Link To Comment
EBT cards to the "poor" is a Democrat Gratis Program to their Urban constituancy...That fraud is RAMPANT in the program is a FEATURE not a bug.

And, every swipe card systems I've seen in the Philadelphia that accepts EBT cards, also are offers "Cash Back" when EBT users checkout, just like "regular" debit card holders...you buy a 1 dollar item, you "take" the maximum cash the store allows (usually $20, but Target and other large store chains allow up to $50)

The EBT system is NOT for food purchases, it is a CASH REWARD program with a minor inconvenience (the 1 dollar purchase) created to serve as a fig leaf.
1 year ago
1 year ago Link To Comment
"But while taxpayers are the ones fleeced by welfare fraud, the poor are also put at risk by a program that has no safeguards to ensure that the people who get the money are the ones it intended to help."

Never fear, the ones the programs are really intended to help, the bureaucracies that administer them, get most of the money.
1 year ago
1 year ago Link To Comment
The "Politicians, eager to develop constituents dependent on the government, aren’t particularly interested in reforming a defective system." (Read Democrats) don't want welfare reform for the same reason they don't want immigration reform. They want armys of people totally dependent on government for their survival. These people can be trusted to always vote for the party that gives them free stuff. Its either illegal alien women telling reporters how to get govenment assistance or welfare mothers raving over free phones, or its minority "political activists" voting 16 times in the same election. We have a whole sub-cuilture of completly dishonest, self-serving entitlement dependent freeloaders. And we have a political party that cares nothing about what is good for the country. They put party ahead of country and they receive cover and support from the media. Damn them all, they are destroying the most noble and benign country in the history of the world.
1 year ago
1 year ago Link To Comment
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