USDA Fails to Replace SNAP Benefits Stolen Through Card Skimming, Class Action Says

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A proposed class action alleges federal officials have refused to replace Supplemental Nutrition Assistance Program (SNAP) benefits stolen through an electronic form of theft known as “skimming.”

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The 30-page lawsuit was filed by New York SNAP participants who claim United States Department of Agriculture (USDA) Secretary Tom Vilsack and USDA Food and Nutrition Service (FNS) Administrator Cindy Long have wrongfully denied them reimbursement for SNAP benefits stolen from their state-issued Electronic Benefits Transfer (EBT) cards as they checked out at grocery stores.

The case stresses that as a result of USDA officials’ refusal to reimburse consumers for stolen SNAP benefits, program participants who fall victim to EBT card skimming are often unable to feed their families until the following month’s benefits are issued.

Originally established in 1964 and formerly known as the Food Stamp Program, SNAP is a federally funded and state-administered initiative that provides food assistance to low-income households, the complaint relays. The filing explains that until the late 1990s, states mailed participants their benefits in the form of paper coupons, which state agencies were required to replace if stolen prior to “receipt.” 

In 1996, after the program began to provide participants with EBT cards to access their benefits, Congress amended the federal Food Stamp Act, now known as the Food and Nutrition Act of 2008, to state that (emphasis added): “[the] replacement of benefits under an electronic benefit transfer system shall be similar to the regulations in effect for a paper-based supplemental nutrition assistance issuance system,” the suit says.

“Congress’s intent in adopting [the provision] is clear: under the EBT system, as under the paper-based system, States are authorized to replace benefits stolen prior to ‘receipt,’ and the federal government is responsible for covering the cost,” the filing reads.

However, contrary to Food and Nutrition Act requirements, the USDA in April 2010 issued a new set of regulations stipulating that states can replace SNAP benefits only if food purchased with the benefits was destroyed “in a household misfortune,” or if the EBT card was lost or stolen, the suit notes. The complaint contends that for reasons unexplained by the USDA, the rule eliminated SNAP participants’ right to replace benefits that were stolen prior to receipt.

As such, the complaint relays, consumers are no longer covered if they lose benefits to skimming, which the filing asserts was already a “well-known and pervasive” issue when the regulations were passed.

“By premising replacement on the mode of theft used to steal benefits, Defendants have acted arbitrarily, capriciously, and contrary to law,” the lawsuit charges.

Per the suit, skimming occurs when a perpetrator places a Bluetooth-enabled card-reading device on an ATM or point-of-sale device that captures a consumer’s credit or debit card number, account information and personal identification number (PIN) as they swipe their card.

“Typically, these devices take the form of physical overlay devices with Bluetooth technology and are designed to look exactly like the underlying device,” the complaint says. “For example, in a retail store, thieves often install a false, Bluetooth-enabled cover designed to look exactly like a debit card reader over a real debit card reader.”

The filing shares that perpetrators use this information to duplicate the consumer’s EBT card and steal from the government-controlled account where their benefits are stored.

In an attempt to prevent EBT benefit fraud, Congress passed the 2023 Appropriations Act in December 2022, directing the USDA to require states “to replace benefits that are determined by the State agency to have been stolen through card skimming, card cloning, or similar fraudulent methods,” the suit relays.

Although the 2023 Appropriations Act would provide SNAP participants with the same right to replacement benefits that coupon holders had, regulations set by the defendants do not authorize states to use federal funds to replace benefits lost EBT card skimming, the case says.

Moreover, the act applies only to instances of skimming that occurred after October 1, 2022, prohibits states from replacing more than two months’ worth of benefits, and permits only two replacements per year, the case asserts.

“Because many Plaintiffs’ benefits were stolen prior to October 1, 2022, and because many lost more than two months’ worth of benefits, they are not able to benefit from the Act’s new provisions,” the suit says. “And because skimming is rampant, Plaintiffs will not be made whole for losses they are not responsible for and cannot control.”

According to the Office of Temporary and Disability Assistance (OTDA), the state agency responsible for administering SNAP benefits in New York, the state has seen 10,679 instances of SNAP benefit skimming since January 2022, totaling $4,649,158.77 worth of stolen benefits, the lawsuit says.

Ultimately, the complaint claims that the 2010 USDA-FNS regulation is unlawful because it contradicts Congress’s explicit direction that SNAP benefit replacement policies remain “similar to” procedures used under the paper-based coupon system, whereby states were required to replace stolen benefits prior to receipt.

The lawsuit looks to cover anyone in New York who, since January 1, 2022, has been the victim of the skimming of SNAP benefits (including P-EBT benefits) and has not had the full value of their stolen benefits replaced by the city, state or federal government.

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