Michiganders using food assistance have seen a sharp increase in stolen benefits.
The Michigan Department of Health and Human Services (MDHHS) replaced more than $240,000 in benefits so far this year, up 32% from the year before. The fraud, following a national increase in theft reports, targets the Supplemental Nutrition Assistance Program (SNAP) and the low-income families who rely on the benefits. It involves tactics such as card cloning and skimming that draw down balances, and phishing schemes that seek out personal information to gain access to an individual's card.
More than 1.3 million residents — nearly 743,000 households — in Michigan rely on food assistance benefits. Each year, the state administers more than $3 billion in the benefits to families.
How much in benefits have been stolen?
In the fiscal year ending in September 2023, MDHHS received 651 reports of Electronic Benefits Transfer (EBT) fraud and, of that, approved 592, replacing $181,778 in benefits. And so far this fiscal year, the department has received 1,219 reports of stolen benefits and accepted 414 requests, replenishing $240,349 in benefits. MDHHS denied claims when the department did not find EBT cloning fraud.
Nearly all of the stolen benefits were used on out-of-state transactions, according to MDHHS.
"Michigan, like other states across the country, have noticed increases in SNAP EBT fraud over the past couple years," MDHHS spokesperson Lynn Sutfin said in an email.
Last May, Michigan Attorney General Dana Nessel said her office uncovered an interstate "food stamp fraud ring" that obtained EBT card data from 8,000 cardholders, who mostly lived outside Michigan, and reproduced cards for purchases in metro Detroit Sam's Club stores. The thefts amounted to more than $4 million, according to a news release at the time. Six defendants pleaded guilty in the case, and one is scheduled for a jury trial in August, Nessel's office said.
How are benefits stolen?
Fraudsters use tactics such as card cloning, skimming (when illegally installed devices on ATMs or other payment areas record card information) and phone, text and email phishing. Current EBT cards use a magnetic strip technology that is vulnerable to fraud because it can be easily copied by credit card readers and skimmers, according to MDHHS.
The department has also noticed an increase in phishing scams. For instance, a large group of phone numbers would receive a fake text message saying that an EBT card has been locked and provide a number to call for help. Once a person calls the number for help, they are asked to share EBT card details, then the call is terminated and leads to the theft in benefits.
"MDHHS will never send emails or texts requesting card or PIN information," Sutfin said.
The U.S. Department of Agriculture categorizes these tactics as SNAP fraud, where entities outside of the program steal benefits from recipients. That's distinct from what the USDA defines as recipient fraud, where participants violate the program rules to receive benefits.
What's being done to address fraud?
The USDA Food and Nutrition Service is responding to the rise in fraud by implementing EBT cards with chips, piloting it in California and Oklahoma this summer. It's unclear when Michigan would start using chip cards, according to MDHHS. The USDA is also testing mobile contactless payments over the next few years in Oklahoma, Illinois, Missouri, Massachusetts and Louisiana.
In September, the MDHHS Office of Inspector General received $749,987 as one of five USDA SNAP Fraud Framework Implementation grants to investigate and prevent the misuse of SNAP benefits.
How can people protect themselves from SNAP theft?
Michiganders receiving food assistance benefits should protect their card information. Here are some best practices, according to the the state's health department and USDA:
- Download the ebtEDGE mobile app, which allows recipients to block out-of-state and internet purchases and freeze EBT purchases until it's unfrozen.
- Frequently change the PIN number (at least once a month before benefits are issued) and use a complicated combination. Don't use the last four digits of the card number or sequential and repeated numbers.
- Do not share PIN and card number with anyone outside the household and cover keypads when entering the pin.
- Be on guard for phishing schemes. State agencies will not call, text or email for information.
- Contact the MDHHS Office of Inspector General (OIG) with reports of suspected fraud. Go to michigan.gov/reportwelfarefraud and notify an MDHHS caseworker. Call the OIG at 855-MI-FRAUD (643-7283).
Contact Nushrat Rahman: nrahman@freepress.com. Follow her on X, formerly known as Twitter:@NushratR.
