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Fraudulent use of EBT cards seeing an increase, scrutiny

Hubbard County Social Services is experiencing an up tick in, for lack of a better term, food stamp fraud.

Although actual food stamps haven't been issued in a decade and have given way to EBT cards, those Electronic Benefit Transfers have been abused.

And investigators are delving into the problem, which local social service personnel would like to see changed legislatively.

Some beneficiaries have sold their EBT cards and PIN numbers for cash.

"Is fraud on the upswing? I think it is," said Sandy Schmidt, financial assistance supervisor for Hubbard County Social Services, adding, "I don't know if convicted fraud has risen, but suspected fraud is on the upswing.

"We are seeing more situations where people are requesting replacement cards and the claim is that they have been 'lost,'" Schmidt said.

"In some instances they legitimately have lost the card," she said. "They pay $2 for a replacement card. But we're seeing more and more cases where the cards are lost multiple numbers of times, 20, 30 times."

And Schmidt said this is where the Minnesota Legislature should step in.

"Instead of the $2 fee for a replacement, pick a reasonable number up to 'X' number of replacements (a client can request) but any card replacement above that number, make the charge quite high to make it less beneficial," she suggested.

Ideally, Schmidt would like to see vendors ask for photo identification every time someone uses an EBT card. Realistically that won't happen, she admitted.

EBT beneficiaries would likely sue for discrimination if only their cards would be singled out for proof of ID and not credit and debit card users, she said. And store clerks simply wouldn't have time to verify that the card user was actually issued the card. It would slow checkout lines.

But the department can track EBT transactions to determine if something is out of the norm.

"We have access to a service called Fraud Prevention Investigation Services," Social Services Director Daryl Bessler said. "We are with Cass County and Wadena is part of that initiative. I think when we suspect something is going on we get a PI (private investigator) and they go out and try to nip it in the bud, contacting the person."

The portability of EBT cards has worried Hubbard County commissioners, so last week Bessler and Schmidt reported their efforts to combat fraudulent use of the benefits.

Commissioners were concerned about out-of-state use of the cards.

"We get monthly reports from the state of Minnesota that let us know if cards are used out of state and we can track those," Schmidt said. "We also have the capability of going in and looking at any individual's usage and track to a date, time of day, the store, the item and how the card was used, the dollar amount spent."

She told the board if there is out-of-state use of the card, the user is contacted. Clients must inform the department within 10 days that they have moved. Some are legitimately out of town, such as truck drivers.

But in the case of activity out of state, if the client cannot be contacted to determine why they're using the card out of the region, the card is canceled after 30 days.

Bessler said computerized tracking of the cards has cut down on fraud to a degree.

"My sense is from the early dates before we went to the cards," he recounted. "Then people would say, 'Oops, somebody stole my food stamps out of my mail box.' And then we would have to reissue them."

But Bessler admitted his view toward benefit fraud has changed over the years.

"With all of the stuff that goes on at the federal level, I cannot see people behind bars," he said. "That's pretty radical if they have families, but sometimes you have to do it."

He favors early intervention of suspect activity to keep enforcement at an administrative level.

"If the amount that's owed back is under $500 we have an administrative process we follow," he said. "If it reaches a felony level, depending on the willingness of the person to be cooperative, we may end up finding ourselves adjudicating it in the court. "

Both Schmidt and Bessler say in actual fraud cases, proving intent on the part of the person illegally using the card, selling the benefits or otherwise gaining an unfair advantage, are tough.

Neither can pinpoint how much fraudulent activity is costing Hubbard County taxpayers. It's unknown.

When a client comes in for the tenth or 12th time to request a new card, Schmidt gives them what she calls the "motherly talk." She explains fraud and its penalties. She says she gets through to some.

Others, like the client who has just lost a 35th card, are tougher cases.

And those are the clients who could eventually have a date in court.