The Justice Department recently uncovered a shocking case of fraud targeting California’s low-income families, revealing that nearly $200 million intended for them was fraudulently drained from their Electronic Benefit Transfer (EBT) accounts. This elaborate scheme, orchestrated by an organized criminal operation, exploited security vulnerabilities within the EBT system to illegally access and deplete the federally funded accounts designated for those most in need.
Operating between June 2022 and February of the following year, the criminal enterprise strategically deployed skimming devices at ATMs and point-of-sale terminals across various locations in California. These deceptive devices, disguised as legitimate card readers, were strategically positioned in areas with a high concentration of public assistance beneficiaries, maximizing the potential for data theft.
The skimming devices surreptitiously captured the account information from EBT cards whenever unsuspecting recipients utilized their cards to withdraw cash or make purchases. Subsequently, the obtained account data was cloned onto the magnetic strips of other plastic cards, often generic blank cards or other types of debit/credit cards, to create what are known as “cloned cards.”
These cloned cards featured encoded information on the magnetic strip that didn’t match the numbers or names embossed on the card’s face. To facilitate transactions with the cloned cards, the criminals affixed labels with the PINs directly onto the cards, streamlining access to the funds during ATM transactions or in-store purchases.
This operation was meticulously organized, involving a structured criminal network with the specific intent to defraud the state’s EBT system. By employing this method, the perpetrators could withdraw EBT funds at ATMs and purchase goods using the stolen benefit dollars, effectively laundering the stolen funds through retail transactions.
The impact of EBT fraud is particularly devastating for vulnerable recipients, as it deprives them of essential financial support and exacerbates the challenges faced by families already struggling to make ends meet. Despite ongoing efforts by law enforcement agencies like the U.S. Secret Service to investigate and combat EBT fraud, schemes like these underscore the importance of safeguarding public assistance programs and protecting the welfare of those most in need.