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Welfare Debit Card Fraud

Welfare Debit Card Fraud

There’s always someone looking for ways to scam the system. Welfare fraud is increasing at an alarming rate and much of it has to do with the debit cards recipients are issued. Still, there’s another growing problem that must be addressed.

Defining Welfare Fraud

Despite the alarming rate in which it’s growing, many are unaware of what constitutes welfare fraud. Simply stated, welfare fraud involves the intentional misuse of various state and/or federal funded welfare programs. The ways in which this is accomplished is as varied as those who are guilty of committing these crimes.

It can involve lying on paperwork or withholding certain information, lying about one’s identity or selling the debit card that has benefits direct-deposited each month. Crime statistics indicate not reporting accurate income is the number one way this fraud is committed. It’s also not unusual for investigators to find a bold disregard for disclosing relevant information on how many people are in a home reporting and in rarer cases, physicians are playing a role by lying on medical documents.

The Thieves

The extensive efforts of some is almost unbelievable. The lengths many people go to in an effort to “scam the system” continues to grow. And if you think it’s a new problem, think again. As far back as the 1970s, there have been instances of those going to great lengths to steal from the government. The recent changes from paper “food stamps” to the credit card-like debit cards has done little to dissuade criminals.

A few examples include a Chicago woman, Linda Taylor, who was accused of using 14 aliases to steal from the state’s welfare system. She received more than $150,000 in medical benefits, cash assistance and food stamps. She made her rounds from one county or district to another. In the early 1980s, another woman was found guilty of 12 counts of welfare fraud. This story is bizarre in that she claimed to be the mother of 38 children, none of whom even existed. Reports that came out during that time revealed she was already a wealthy woman before she began her crime spree.

Cost for Taxpayers

Even if you’ve never collected any type of government assistance, you’ve paid into these programs with your tax dollars. The costs associated with investigating suspicious activity continues to rise, too. These ongoing problems continue to cost the collective systems millions of dollars every year. In each state, there are laws and fines; the penalties for extensive fraud warrants a felony convention, one that could land a perpetrator in prison for many years.

Due to the growing rate of this crime, several states now offer large rewards for the reporting of welfare fraud that leads to a conviction. The problem is it’s hard for anyone to detect unless they have first hand knowledge. Further, finding the resources to investigate potential fraud is difficult. When the debit cards are used, it’s rare merchants ask for identification and even if they did, it’s difficult to discern between the granddaughter who’s buying groceries for a grandmother or the granddaughter who’s stolen Grandma’s benefits card and is on her own shopping spree.

Move to EBT Cards

It wasn’t until 200 that the federal government thought EBT cards, used the same way credit cards are used, would be much easier for those receiving aid and those distributing the funds. Soon, there were talks of exempting EBT cards from the same laws and guidelines that protect credit card users. Before long, and like anything else, these electronic benefits have resulted in a multi-million dollar business opportunity for banks and other companies that secure contracts to provide EBT cards and ATM networks where the cards can be used.

Stealing From the Most Vulnerable

While welfare fraud committed by those who receive benefits continues to baffle lawmakers, there exists another problem, and one that’s threatening to turn the collective welfare system on its head.

Skimming, as most know, is when thieves use any number of remote efforts to steal credit card and debit card information. A criminal can simply walk past a consumer and if his timing is just right and if his skimmer is aligned just so, he can steal from a credit or debit card – and now, in these instances, the EBT cards that have welfare benefits on them – from the consumer. The consumer never knows until he realizes the errors on his statements or when he goes to use his card, only to discover there’s nothing on his EBT card to pay for it.

Remote Crime

Here’s where things really become frightening. In 2009, criminals managed to steal, via skimming, identity theft and other methods, close to $450 million. Much of that money was stolen from those making ends meet with their welfare benefits. If you’ve ever tried to recoup the losses on a debit or credit card, you know that there are federal laws in place that ensure the process doesn’t break down and you’re quickly reimbursed for your losses. When it comes to state benefits, however, they’re not afforded the same protections. In fact, there are no guidelines in place that address EBT debit cards. This means the nation’s most vulnerable are at the biggest risk.

Until these criminals are caught, tried and convicted, there are those who will continue to use the system as their personal access to free credit. Whether it’s the debit cards most states now use to issue benefits or the efforts of some to take advantage of medical assistance they do not qualify for, there’s no doubt for every conviction, there are many more waiting to step up to the plate. Currently, there are discussions across the nation that would require welfare benefits stolen from EBT cards to be replaced within five days. The time has come for a major overhaul within the federal government. It’s already a national eyesore and it’s time for a change.

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