EBT Money Withdrawn at Liquor Stores, Casino

February 27, 2013 | Youth Today |  Link to article

PROVIDENCE, R.I., (WPRI) - Thousands of dollars in cash assistance were withdrawn from ATMs in liquor stores, bars, smoke shops and even Twin River casino in Dec. 2012, according to welfare data obtained by Target 12.

In all, Rhode Island's needy families swiped their taxpayer-funded EBT cards more than 60,000 times during the month, spending nearly $3.1 million in the process.

The cash comes on the same gold-colored cards that are given to food stamp recipients, but there are currently no restrictions on where the debit cards can be used. Last year, President Obama signed legislation that requires states to ban the use of EBT cards at questionable establishments by 2014, but Rhode Island is among many states that have not begun to implement the law.

Target 12 found 200 transactions worth approximately $10,000 from venues that will likely be prohibited from accepting EBT cards, including more than $4,000 in ATM withdrawals from liquor stores, nearly $5,000 from smoke shops and a $106 charge at Twin River in Lincoln, according to December figures.

Those swipes often come at a price. The state has a contract with JP Morgan that allows cash recipients to use their cards a certain number of times, but once they exceed the limit, the bank fees begin to pile up. At standalone ATM machines, the charges can be exorbitant.

In one instance, three $20 withdrawals were made on the same day from an ATM machine inside a Providence liquor store, which is located just a block away from a bank. Each transaction came with an additional $2 fee.

"Certainly we don't want people to be using these benefits for those purposes," Fred Sneesby, spokesman for the Department of Human Services, told Target 12. "That's not the intent of the cash assistance or the program."

During the 2011-12 fiscal year, 7,104 Rhode Island residents received cash assistance each month and Sneesby said the majority of recipients use the money for basic necessities like diapers, food or rent. In order to qualify for the program, a family of four must earn less than $1,438-a-month and have less than $1,000 in assets, not including a home or car. The maximum amount a family can receive is $632 each month.

"We don't want the public to paint recipients with a broad brush," Sneesby said. "Because this is a relatively tiny percentage of the transactions of the EBT cards, so it's a very small number in comparison to number of transactions."

But critics say the state needs to begin cracking down on questionable venues that allow residents to withdraw cash on their EBT cards.

State Senator David Bates, R-Barrington, has introduced legislation that would ban the purchase of alcoholic beverages, lottery tickets or tobacco with EBT cards. Bates said he modeled his bill after similar legislation that was passed in Massachusetts.

"Cash assistance programs are wonderful for the people that are really in need of it, but for people who want a gallon of ice cream and a filet mignon every night, that‘s not right," Bates told WPRI.com.

Regardless of whether Bates' bill becomes a law, states have until next year to begin enforcing the federal restrictions or they risk losing funding for cash assistance programs. He said his goal is to focus on enforcing the law on retailers, not recipients.   

"If the feds aren't going to do anything about it, we're going to try," Bates said. "This gives Rhode Island a chance to get in the mix and get the state police involved."

Public policy experts say they're not convinced that regulating the use of EBT cards is necessary. Elizabeth Lower-Basch, a policy coordinator at the Washington D.C.-based Center for Law and Social Policy, said that depending on how states implement the federal restrictions, they may end up spending more on enforcement than the cash assistance recipients spend at questionable retailers.

"Sure, do low-income people buy some things that aren't ideal? Yes, so do the rest of us," Lower-Basch told WPRI.com. "It's how much money do you want to spend on these intrusions? You want to make sure you're not spending dollars to catch dimes."

Lower-Basch noted that California is one of the states that already has a monitoring system in place, but said she isn't sure hiring a company to review every transaction and flag those considered ineligible is the best use of taxpayer money either.

Sneesby said technological advances will allow Rhode Island to pay more attentions to individual transactions, including those from out of state.

Target 12 found nearly 700 withdrawals made outside of New England, including a bar in Chicago, a Piggly Wiggly in Alabama and four transactions worth $620 in Puerto Rico. At one McDonald's location in Rockland, MD, a Rhode Island recipient swiped their EBT card 38 times over the course of a month.

Sneesby cautioned that there could be plenty of reasons a recipient would using their cash assistance out of state and said it is not illegal to do so. He said states have restrictions in place that prevent peoplerom receiving benefits from more than one state at the same time.

“This is a federal benefit,” he said. “It is all 100 percent federal money and so there are no boundaries in terms of state boundaries.”

Sneesby said it is unclear what, if any, penalties will be assessed to recipients or retailers once the federal law is in place.

“I imagine it would be a combo of sanctions against recipients if they use their EBT card at these venues, or retailers as well, people who own these venues,” he said. “They would be fined, perhaps fined. I don’t know the sanctions that would be developed.”

Allison Gaito contributed to this report.

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