SACRAMENTO, Calif. — Criminals are getting smarter every day and now they're preying on the most vulnerable in our state, draining millions of dollars from EBT cards people need to survive. Taxpayers are paying for the reimbursements.
ABC10 spoke with multiple EBT theft victims over the last few months to help get some of their questions answered. It's how we met Kevin who lives in south Sacramento.
The father of two says he lost his job in 2023 and reluctantly signed up for CalFresh, California's food assistance program. Soon after, he received an electronic benefits transfer card, also known as an EBT card.
"It has allowed me to continue to buy food, to be able to eat and feed my kids and survive during this time,” said Kevin.
The state deposits money on these debit cards each month for recipients who qualify for food and cash assistance programs. The programs are run by the California Department of Social Services.
For millions, these EBT cards are survival, but every time Kevin goes to the grocery store, anxiety creeps in at the register. Several incidents with his EBT card being declined can do that.
Kevin shared how confused he was the first time his card was declined.
"I thought, what the heck's going on? So I called the number on the back of the card and my balances were zero," he said. "It wouldn't let me access my account."
His account was drained. His EBT card information was stolen.
California has hemorrhaged money the last few years trying to reimburse the benefits recipients like Kevin receive — victims who’ve had their EBT benefits stolen.
According to CalMatters, California was losing about $10 million of taxpayers' money a month to EBT theft in 2023. Benefits are often stolen repeatedly.
Kevin said just a few months after his benefits were reimbursed, they were stolen again along with the monthly benefit he had just received.
“$2 and that was it. The rest was wiped out," he said.
Kevin received three EBT replacement cards in one year to protect his account.
Investigators tell ABC10 thieves are scamming and skimming EBT cards. Scamming is when fraudulent text messages, emails or calls are sent to people to get sensitive information. Skimming is where someone inserts a device at a grocery store, gas station or bank capturing a cardholders' information.
In Sacramento County, skimming is the most common type of theft and happens more frequently at convenience stores with ATMs.
Janna Haynes with the Sacramento County Department of Human Assistance says one of the hardest parts of dealing with EBT theft is the pain it causes the victims.
"You're dealing with people in person that are desperately waiting for these funds, so that they can take care of themselves and their family,” said Haynes.
Haynes says the county has two investigators that strictly work on EBT claims. Investigators shared EBT theft concerns started in 2019 and they warned California's Department of Social Services when they cracked a major case.
Sacramento County EBT fraud investigators said Jawuan Gibson was able to scam over 1,600 victims in more than 30 counties in California. When agents finally caught him, they found $950,000 in cash and ATM card readers, among other items.
Gibson pleaded guilty to multiple counts, including grand theft and possessing access card making equipment. He was sentenced to 48 months in state prison and ordered to pay over $800,000 in restitution to reimburse victims.
Sacramento County, like many other counties, is seeing a significant increase in EBT theft. County data shows just in the month of January, recipients were reimbursed more than $550,000. Throughout the year reimbursements continued to climb.
In December alone, the county ended up reimbursing more than $1.6 million. By the end of 2023, Sacramento County reimbursed over $12.5 million... and that’s just one year.
“So if you multiply that over many years, over many counties, you can imagine the prevalence of the problem. It's hard on taxpayers,” said Haynes. “All of that money comes out of the general fund, so it's a huge financial impact as well as a mental and emotional tax on the people that are getting this money stolen.”
Sacramento County says they able to recoup money lost to EBT theft less than 5% of the time. When they are able to recover money, it goes back into the general fund.
Shawn Ferris and Gregory Mahony lead the California Welfare Fraud Investigators Association. The nonprofit has been around for more than 50 years, investigating public social service programs, including EBT theft. Both Ferris and Mahoney also supervise their own welfare fraud departments in their own counties.
"Part of the reason why California is so ripe for the picking is we give so much out,” said Ferris.
The CWFIA says it's working with the state to change their approach to EBT theft, adding that there are two victims — the benefit recipients and you.
"There's taxpayers across the state that have to foot the bill for this, that continuously should have an expectation that those that issue out these monies are good stewards of the taxpayer funds,” said Ferris.
Mahony says he warned the state about how vulnerable cards were in the past.
"Five years, how many millions of dollars have gone? I warned them a couple of years ago that EDD has been a slap in the face and you're running down that same road? Do you want that embarrassment? Do you want to lose your jobs? Because what's going to happen when that hits," he said.
Many viewers reached out to ABC10 suggesting the theft is happening internally. We took that question straight to Sacramento County and investigators.
"I think that's a fair question, but I think that people are misunderstanding or undereducated on how these thieves are operating,” said Haynes. “They're literally standing in front of an ATM waiting to withdraw those funds, they need to withdraw them before the client does.”
She adds the county doesn't know of any employees committing EBT theft.
“That would be a really horrible situation, but they would be subject to the same prosecution that anybody else would," she said.
The CWFIA says the evidence points to organized crime rings working up and down the state.
“I can say emphatically this is not an internal crime. This is organized crime. We are dealing with the criminals,” said Ferris, adding organized crime rings know the system and study it.
County fraud departments are hitting roadblocks trying to investigate crime syndicates throughout the nation. Mahony explains how investigators are reaching out to federal partners like Homeland Security and the FBI.
"We are all trying to chase after the same thing and yet, we don't have a central resource to even run a picture through to say, has anyone nationwide run into this person," said Mahony.
The CWFIA says county fraud departments are calling each other to cross reference information. They’d like to see a central database to help track crime trends and reports.
"We have reached out locally to our state asking for this resource. It has not gotten us any traction, we have zero people raising their hands to answer this call,” said Mahony.
Here’s another hurdle for investigators. In 2023, the state removed a requirement recipients file a police report with their fraud claim to be reimbursed, giving investigators even less information to work with. As more reimbursements are issued, investigators say it gets harder to look into the crime.
For some, there's an easy fix — chip card technology — but implementing it isn't easy.
The California Department of Social Services said in a statement to ABC10 that incorporating chip cards would require significant changes to the current EBT infrastructure since EBT transactions are processed differently than commercial credit card and bank cards. The state added that, “Without these underlying, back-end technological upgrades, a transaction using a chip/tap EBT card would fail.”
Currently, no states issue EBT cards with chips. Federal regulations direct states to use EBT cards with magnetic strips only. California is working to be the first to update restrictions and allow chip and tap technology, which is expected in summer 2024.
At the end of last year, the CDSS launched a new app called ebtEdge, so cardholders are able to freeze their cards, change their PINs and block out-of-state transactions.
U.S. Senator Ron Wyden from Oregon and other lawmakers recently introduced a bipartisan bill that, if passed, will require new EBT cards nationwide to include chips after two years. All older cards would need to be reissued with chips within five years. The United States Department of Agriculture would be directed to provide funding to support states making the transition.
But the investigators we spoke with already see a problem with chip technology. The CWFIA says field investigators have seen thieves jam chip readers, so people are forced to swipe their cards, which results in their information being stolen.
Investigators and recipients want the state to implement a two-step authentication process to access accounts or allow recipients to verify their purchases in the app.
For now, millions of cardholders are doing the best they can, hoping their cards work.
"I honestly can't wait until I have a job where I feel productive again, where I can feel proud again,” said Kevin. “I can't wait until I don't have an EBT card anymore, means I have a job.”
If you have been a victim of EBT theft, here’s where you can find how to begin the reimbursement process.
WATCH MORE ON ABC10: The new app that protects against EBT theft
