EBT Scams (7 Examples + How to Avoid Them)

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EBT refers to a system that allows state welfare departments to issue benefits through a magnetically encoded payment card.

The continuous evolution of technology demands an ongoing commitment to staying informed about the latest scams and their prevention strategies. Electronic Benefit Transfer (EBT) scams require a similar level of vigilance.

EBT scams are when fraudsters seek to capitalize on government assistance programs intended to support those in need.

This form of financial exploitation can have severe consequences on vulnerable populations relying on these resources.

1) Unauthorized Benefit Transfer

In this type of scam, the perpetrators first gather personal information about the EBT cardholder. This could be through any means, including phishing scams, data breaches, or even purchasing information from other criminals.

Once they have the required details such as the Social Security Number, EBT card number, and/or PIN, they can use the card as if it were their own.

More precisely, they counterfeit or clone the EBT card using the cardholder’s credentials and then start using the benefits themselves or sell them to willing buyers.

Even worse, in some instances, these fraudsters have been known to transfer benefits from the victim’s card to another card under their control, effectively stealing the victim’s benefits.

To protect themselves from such scams, individuals must ensure that their private information stays private. This involves keeping card numbers and PIN safe, using secure internet connections, having a credible antivirus software for online activities, and regularly monitoring benefit accounts for any unauthorized transactions.

2) Counterfeit Cards

Counterfeit cards are a severe problem in the world of EBT scams. To carry out this scam, fraudsters use stolen EBT card numbers and PINs to create counterfeit cards.

They can do this by encoding the stolen account information onto an old EBT card, another type of magnetic stripe card, or even a new blank card.

The technology used to make card counterfeiting possible has become rather sophisticated, and in many cases, these counterfeit cards look just as good as the real ones. Once a fraudster has a working counterfeit card, he or she can start using the benefits of the unsuspecting victim.

In some situations, these counterfeit cards are even sold to others willing to buy them.

Much like dealing with unauthorized benefit transfers, individuals must be careful to safeguard their EBT cards and the related information.

3) EBT for Cash or Non-Eligible Items

This EBT scam involves the cooperation between unscrupulous retailers and EBT cardholders. Here, the duplicitous retailers allow cardholders to use EBT benefits to purchase non-eligible items such as tobacco, alcohol, or items that are not essential food.

In some more significant violations, they even permit cardholders to trade their EBT cents for cash at a profit margin. For every dollar of EBT benefits, only a fraction thereof is given as cash to the cardholder. This blatant violation of program guidelines not only cheats the system but also enables more scams and black-market activity.

However, this scam often requires the willful participation of the EBT cardholder. If you’re an EBT cardholder, it is super important to understand and follow the rules set out for the use of these benefits. Moreover, report any retailer or person offering such restricted transactions.

4) Interest Schemes

Interest schemes involve similar tactics to those used in the traditional money-loaning business, only that the highly vulnerable EBT cardholders are the primary targets.

In these schemes, fraudsters loan out cash to EBT cardholders in exchange for their future benefits. The two parties agree that when the cardholder receives their next benefits, they’ll repay the scammer with substantial interest, typically in the form of more benefits or cash.

This predatory lending practice takes advantage of low-income individuals and families who may be desperate for cash.

Not only does it disrespect the principles of the EBT program, but also leaves the affected households in a worse state due to the debt cycle. The best way to avoid this type of scam is to only use your EBT benefits as allowed by the program rules and to report any occurrences to the local welfare office or SNAP hotline.

5) Card and Benefit Sales

Quite disturbingly, some individuals willingly participate in scams where they sell their EBT cards and benefits. This is often done for cash, which technically is a form of EBT trafficking. The mechanics of this scam see an individual often selling their benefits at a fraction of the cost to a buyer.

After the exchange, the original cardholder reports the card as lost or stolen and is then issued with a new card, at a fee, while still retaining their remaining balance. Such transactions are illegal, and if someone is offering to sell their EBT benefits to you, or buy yours, it is undoubtedly a scam.

To prevent such scams, one must understand the rules of the EBT program. Any suspicious activity should be reported to the local welfare office or the state’s SNAP hotline.

6) Skimming Devices

This type of scam is more prevalent in credit and debit card transactions but has found its way to the EBT program as well. Here, the scammers use a device known as a skimmer, which reads and stores card information when swiped or inserted.

These skimming devices can be discreetly placed on ATM card readers or at the point-of-sale terminals.

This way, every time an unsuspecting victim uses their EBT card, their card information is captured by the fraudster. The scammer can then use this information to clone cards, make counterfeit cards, or engage in unauthorized benefit transfers.

Avoiding unfamiliar or suspicious card machines and shielding your PIN during transactions can help you avoid falling victim to skimming devices.

7) Benefit Trafficking

Finally, benefit trafficking is a severe and prevalent form of EBT scams. This type of scam involves the buying, selling, or trading of EBT benefits for cash, drugs, weapons, or other illicit goods. It is essentially a black-market operation often involving organized crime groups.

Benefit trafficking is one of the most serious program violations and can result in severe penalties, including permanent disqualification from the program, fines, and even jail time.

To stay clear of such scams, the cardholder must robustly adhere to the program rules. If you become aware of such activities, it is important to report them as soon as possible to your local welfare office or law enforcement.

How to Protect Yourself from EBT Scams

EBT scams can significantly impact individuals who rely on these benefits. Here are ten practices you can adopt to protect yourself from becoming a victim of these scams:

Guard Your Personal Information – Do not reveal your Social Security Number, EBT card number, or PIN to anyone you do not trust. Scammers often pose as government officials to steal this information. Remember, official entities will not ask for this information over the phone or via email.

Beware of Phishing Attempts – Be cautious of unsolicited communications through email, text, or phone calls, claiming to be from government or EBT officials seeking personal or financial information. Confirm the source independently, not through the contact information provided in the suspicious message.

Monitor Your Benefit Balance – Regularly check your EBT account balance and transaction history. This will help you quickly spot and report any unauthorized or suspicious activity.

Protect Your EBT Card – Treat your EBT card like cash or a credit card. Keep it in a safe place and do not leave it out where others can see it.

Keep Your PIN Secret – This may sound obvious, but it is essential to keep your Personal Identification Number (PIN) confidential. When entering your PIN at the store or an ATM, shield your PIN from view.

Only Transact with Authorized Retailers – Be sure to use your benefits at approved stores and online retailers to prevent fraudulent transactions. Unknown entities may attempt to ‘buy’ your benefits for less than their value.

EBT scams are a prevalent issue that targets vulnerable populations who rely on these benefits to meet their needs. These scams not only defraud individuals of their deserved assistance but also undermine trust in critical public assistance programs.

By understanding the tactics used by scammers, and adopting safe practices like protecting personal information, monitoring benefit balances regularly, and transacting only with authorized retailers, beneficiaries of EBT can significantly decrease their likelihood of falling victim to these scams.

Remaining vigilant and educated about potential fraudulent practices is key. When in doubt, EBT recipients should always reach out directly to their local EBT office or trusted authorities to validate any questionable communication or transactions. Safety begins with awareness, and everyone deserves to benefit from their EBT allocations without any fear of being scammed.

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