Wednesday, March 07, 2012

This is why you are hated

This section from an actual grocery store receipt I found exemplifies exactly why so many politicians, pundits and civilians display such rage towards those of the public that are receiving benefits from the Government.

Recently I witnessed a customer making a food purchase using EBT card, a State of California benefit card. The card, when used as it is intended, assists those struggling in our society with purchases of food and other necessities. Nothing wrong with that. Sometimes people need a bit of help due to the economy, health or other valid reasons. The card is linked to an account containing funds that is then used to buy groceries and other sundry items can be purchased as long as those items are on an approved list. A few examples of items that can not be purchased using the EBT system are alcohol and hot prepared delicatessen foods. Cold sandwiches can be purchased but hot sandwiches will not process.

Some EBT cards also have a cash option included which is drawn from other benefits and linked to the card. This option allows withdrawals of funds just like if someone was using an ATM and is supposed to be used for those items where an electronic payment is not possible or allowed by the system. Paying for a flat tire to be repaired, a monthly buss pass, phone bill or rent to name a few. What the found receipt displayed here reveals is how easy it is to circumvent the EBT system and use it in ways it was not intended.

What the receipt shows is a misuse of funds and a corruption of the benefits system. The same customer, who had just purchased a cart of food using EBT, then bought a bottle of wine with the same benefits card by selecting the electronic cash option to pay for it. Using State of California assistance benefits this customer purchased a bottle of wine for $9.99 plus tax and also received $20 cash back. After the transaction was completed the customer discarded both receipts onto the floor as they walked away.

It is also noteworthy that the customer refused to use their store loyalty card for the purchase of wine, which would have resulted in a saving of nearly five dollars off the total. In the previous transaction when they purchased food they made a point of using their loyalty card and several coupons. They were demonstrably aware of how to shop wisely and were not unfamiliar with how the EBT system worked or appeared obviously judgmentally impaired in some way.

Not taking advantage of store discounts appears to be a common practice among those receiving public assistance and I've observed it too many times to count from my time as a cashier. One can't help but speculate that if this person's financial situation was so dire, even if they splurged for once, common sense dictates that stretching the benefits as long as they can would be foremost in their decision making. It is a reality that an emergency could arise before the card is reloaded with more funds at the end of the month. The socially disadvantaged, for many reasons, usually have greater out-of-pocket and up-front expenses. Those with greater resources typically have a buffer for health, transportation and other emergencies than those with a fixed or negative income. It is a simple matter of liquidity.

What is likely is that they fear tracking of their purchases and reporting to an agency by the store . This concern has same basis in fact. I witnessed one incident where a bodega owner who routinely used his entire EBT benefit to purchase sodas to stock the shelves of his business was reported to a fraud hotline. Using his "free money" benefits at the grocery store is probably far less expensive than buying the same amount of stock from authorized soda vendors or the discounts offered in a bulk items store. A few people concerned with the bodega owner purchasing soda in amounts far above what would reasonably considered to be for personal use reported him to the benefits office and shortly after that he stopped visiting the store.

Customers who use their EBT card for purchases of alcohol and other questionable items display little worry that their purchases are recorded and tracked by the card itself, which is alarming. Almost all the customers I've observed getting cash or buying items one would not associate with keeping the family healthy appear more worried about tracking at the store level than their case worker. Purchasing habits by any form of payment are regularly recorded and evaluated by stores, manufacturers and advertisers but not by the State of California? One would think that any multimillion dollars program would have a vested interest in ensuring the money is well-spent.

It would be hard if not impossible to completely secure the system. Someone will always try to get over and there will always be loopholes and enablers. Rather than require people who already can't afford transportation or child care to work in order to receive some benefits, as more than a few politicians are proposing, there are other measures that can minimize the gaming of the system. A simple tweak of a computer program (similar to the one the WIC program enacted a few months ago that halted the purchase of some unhealthier foods and minimize costly errors in processing benefits) could go a long way towards making sure that such fraud and abuse by the recipients of assistance was limited. Regular audits of purchases and spending habits that would alert on questionable purchases or cash withdrawals. If such audits are already being accomplished then they are not being monitored effectively. Sure, such attention will cost but the gains from locking down the probably millions in misspent funds would be worth it.

It is clear the benefits system is broken and it is up to California fix it. But let's consider: If the system is dysfunctional then someone, somewhere is getting filthy rich off of it being so. Is it the small percentage of taxes from cigarette and alcohol sales that allow such purchases to go under the radar? That is extra cash that the State would not receive otherwise. Is their no info-dump of purchases or audits of EBT accounts being performed even randomly?

A common complaint from retail workers and customers is people using an EBT card to buy party trays, BBQ supplies, liquor and cigarettes. But at a store level there is nothing to be done. This has to be addressed at a State level. Change can be accomplished, much like when benefit cards at Casinos was disallowed a few years ago. When it became embarrassingly public that a large number of people were using their benefit cards at casinos California took steps to halt the practice. It was a simple software fix. The cards won't work at casinos. When that was disallowed people howled, now forced to either spend their funds on groceries or more likely, seek out other avenues to cash out benefits in order to drop into slot machines.

So come on California. I don't think anyone would begrudge anyone else a hand now and then, but there is a financial crisis going on. Take some basic steps to ensure benefit recipients buy food, not wine and party supplies.

16 comments:

  1. I've read articles postulating that the cards should not be loaded with a monthly total but with weekly or biweekly totals. There is a huge surge of buying at the first if the month and it tapers off at the end. Folks end up buying junk food rather than fresh and going on binge/starvation cycles each month leading to obesity.

    So much can be fixed with simple coding rather than trying to "overhaul" the system

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  2. That's nuts.

    I have a Health Savings Account plan at work. It gives me a means of purchasing prescription drugs and preventative medical goods with a debit card that deducts from pre-tax earnings.

    Now, there's nothing stopping me from going out and buying a TV with it. It's just that come tax time, the bank will send the list of purchases back to the IRS, and I may be in trouble. I doubt that the IRS has the manpower to review HSA activity for every user, but the possibility keeps me from trying to game the system.

    I don't understand why the state of California couldn't implement something similar. You wouldn't need perfect enforcement, just enough to make some high profile examples of people.

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  3. It seems like it would be fairly simple to fix, either

    1) Not allow someone to pull cash directly out of the card.

    or

    2) Require any withdrawn cash be submitted and accompanied by a receipt

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  4. I grew up in a welfare household. My mom could not work for various reasons, but we had a decent public housing to live in, food stamps, not the card this was the 70s and medicaid so basic needs were met. I lived among people on public assistance, and can tell some of those folks had entitlement issues and could be ungrateful. Except for the circumstances they are exactly like those in the financial industry who make 6 figures but only got half the bonus they were expecting this year and are going around bitching & moaning how bad they have it

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  5. One question with the benefit cards, is this a matter of using it or losing it. If there is a balance will the refill be less to reflect the amount not used ?

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  6. Will, No. But even if it is, surely there are better purchases than alcohol? It may be that eventually if one isn't using the full benefit it will be determined that the person should receive less. But even so, then non-perishable food, OTC medicines stocked up against cold and flu or other illnesses would be a way to ensure that the benefits are used wisely.

    The appearance of misuse of the benefits are what makes so many disgusted with the "leeches" of society. Some argue that if the recipients were capable of making better decisions then they wouldn't be in that situation. Not true. As a flickr commenter pointed out (and I was not long ago nearly in the same situation)he was not the stereotypical receiver of benefits. Point of fact, if I remained in Maryland another few weeks I would have been on welfare in spite of having two people in my family at full time jobs.

    Another aspect is that one could consider anyone who does not act in the best interests of themselves and their family by wasting benefits on booze and smokes is that they are sufficiently mentally or emotionally incapable of caring for themselves and need a guardian, whether it be the state (by curtailing what the funds could be used for) or social workers to manage their accounts. If so, that would mean millions of americans would be deemed as a potential danger to themselves or others.

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  7. Fair enough, but in general, most of those "politicians and pundits" who rail against abuses of the welfare system don't do so because they hate those abuses, they do it because they don't believe in the concept of a social safety net at all and they want to do away with it completely. They DO "begrudge anyone else a hand." For them, it's an ideological crusade to dismantle social services, disguised as an effort to reform them.

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  8. Replies
    1. We have an ongoing problem in Michigan with food stamps/EBT going to rich people.

      I've never seen what Uriel says, except maybe from some libertarians that no-one pays attention to.

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  9. In the UK you don't get food stamps (or equivilent), you get money. It's then left up to you what you spend it on.

    I really dislike the whole concept that welfare is a hand-out that the government is generously giving out of the goodness of their hearts - it's a right to which people are entitled if they qualify. Of course people who cheat their way into getting it should be crushed with the entire force of the law, but real folks who qualify should not be stigmatised for being poor, and they shouldn't be micro-managed over what they should or should not be able to spend that little money on.

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  10. How's that UK way of doing things working out?

    And micro-manage, no. But there really should be a red flag of those kind of abuses like cash for parties, booze, etc

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  11. I thought wine was healthy for you, it isn't? I'm still confused about the cash withdrawal though. I would think that they'd require a receipt for those items, but that can be gamed too, I'm sure.

    Entitlement issues. I've been hearing that a lot lately with regard to Gen Y.

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  12. A bottle of booze and some spending cash, courtesy of California, I guess.

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    Replies
    1. I thought about this a bit more. And yes, it's pretty shitty of people (similar to the one in this post) who abuse the system. AND THEN, I wondered which was worse, poor people who rip off taxpayers, or the rich people?

      Examples of the other abusers:

      1. Public office,

      http://www.republicreport.org/2012/make-it-rain-revolving-door/
      Congress: "Let's give each other raises, yay! Then after we're done here in Washington, let's become lobbyists and work for the interests of corporate America for some -- I mean a hellavulot -- more money.

      2. No bid contracts in Iraq, or wherever the hell we (assuming we are both in the States) are spreading democracy. Billions are spent elsewhere for democracy building. Weren't those no bid contractors supposed to build/rebuild the fledglings of democracy's infrastructure -- schools, hospitals, and freakin' power plants? Haliburton got paid, but just try and sift through those receipts....
      And then there are the private security forces who were better paid, better equipped, and generally better off than the enlisted service men and women. That alone was in the upper millions.

      3. Tax Breaks: http://www.nytimes.com/2012/03/14/business/a-nation-with-too-many-tax-breaks-economic-scene.html



      People complain about a socialist system, but I think they often forget about public schools, fire stations, police stations and various other beneficial social services -- none of which causes barrels of bloodshed, cup fulls maybe, but not barrels.

      So, yes, I see your point about the EBT abusers. They suck. I get it. However, I think there are worse abusers of the system -- the ones who create social ills by not only gaming the system, but creating a system that can be gamed in their favor.

      Sorry for not citing sources on some of those items...and, um, for the length.

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    2. Both extremes are equally bad. It just depends on which side of the middle you sit on that makes one seem worse than the other.

      Delete
  13. They can pull money/cash back off purchases. It isn't any different then the old system. Get your welfare check and cash it for cash. Some places do not take EBT cards, so cash is required. And yes, the whole system is messed up. There needs to be an overhaul.

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