January 12

Rooting out EBT fraud more complex than it seems

Gov. LePage’s examples of possible misuse illustrate why it’s so difficult to crack down on questionable purchases.

By Kevin Miller kmiller@pressherald.com
Staff Writer

The numbers sound compelling.

click image to enlarge

Electronic Benefits Transfer cards are used to access cash through the federal Temporary Assistance for Needy Families program.

In a period of just under three years, Maine welfare recipients swiped state-issued benefits cards more than 3,700 times at bars, taverns and smoke shops in Maine. Thousands more transactions took place at out-of-state stores, including “one liquor store in New Hampshire (that) had more than a thousand transactions totaling nearly $8,000,” Gov. Paul LePage said in his weekly radio address Saturday.

Instead of offering clear-cut examples of welfare abuse, however, the LePage administration’s list arguably illustrates why the national campaign to crack down on questionable purchases with welfare funds is so difficult – and why politicians’ black-and-white portrayal of alleged welfare abuses often differs from the fuzzy reality.

A case in point is that “one liquor store in New Hampshire,” in reality a convenience store never named by LePage but identifiable in state reports.

Located in Somersworth, N.H., just across the bridge from Berwick, Borderline Beverage is popular with Mainers who stop by for sodas, chips, groceries and, of course, a six-pack of beer or a pack of smokes.

Data from the LePage administration show that Maine welfare recipients swiped their Electronic Benefits Transfer cards – the EBT debit cards used to access cash through the federal Temporary Assistance for Needy Families program – at least 1,070 times at Borderline Beverage’s check-out counter or ATM between January 2011 and November 2013.

Because of a fatal flaw in the EBT reporting system, Maine and New Hampshire have no idea what those shoppers purchased. And even if it was beer or cigarettes, neither state prohibits residents from making such purchases with EBT cards at the vast majority of stores, although lawmakers in both states are likey to debate such changes this year.

Both states prohibit EBT usage at stores where 50 percent of visible inventory is composed of alcohol (New Hampshire) or alcohol sales make up 50 percent of all revenue (Maine). Officials in neither state could say Friday whether the convenience store met those legal thresholds, however.

When asked about the transactions, an employee, Sam Patel, said the store sells “only food, groceries and soda” to EBT card users, not alcohol or cigarettes.

Those are just a few examples of the challenges facing lawmakers from Maine to Hawaii as they attempt to comply with new federal laws intended to curb inappropriate use of TANF dollars designed to help low-income families pay for everyday needs.

In fiscal year 2011, states used 71 percent of federal TANF dollars to help low-income families pay for child care, job assistance and child welfare programs, according to a June 2012 study by the nonpartisan U.S. Government Accountability Office. States disbursed the remaining 29 percent – more than $4.5 billion worth – as “basic assistance,” which would include cash assistance available through an EBT card or deposited directly into a person’s bank account, the report stated.

But as the GAO report noted, “preventing unauthorized transactions can be time-consuming and is impaired by flaws in available transaction data” that would likely require “significant resources” to correct.

Statistics on misuse of TANF funds – which carry far fewer restrictions than food stamp funds also loaded onto EBT cards – are difficult to come by and often subject to dispute. State administrators and welfare fraud investigators acknowledge, however, that a certain amount of abuse is inevitable in a program designed for flexibility in order to help struggling families pay for everyday needs.

“The program is intended to help families, but beyond that we don’t have any control,” said John Martire, executive board member of the California Welfare Fraud Investigators Association, a state at the forefront of TANF enforcement.

(Continued on page 2)

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