Paul Giorgio: The Real EBT Scammers Are the Vendors, Not the Poor

Wednesday, August 14, 2013

Paul Giorgio, GoLocalWorcester MINDSETTER™

Paul Giorgio believes that while the poor are often blamed for EBT card abuse, vendor fraud is the real culprit.

GoLocalWorcester is proud to announce Paul Giorgio as its newest political MINDSETTER™. Mr. Giorgio will appear on GoLocalWorcester every Wednesday.

The right-wing media has been full of talk lately about how we need to reform the EBT (Electronic Benefits Transfer) card system in Massachusetts. The right-wing solution is to put the card’s owners pictures on the cards. They think that this will end fraud and abuse. It won’t. But this simple solution, as they see it, goes hand and hand with requiring photo ID’s to vote.

It is just a continuation of the demonization of poor people in America.

Treating the symptom, not the disease

Let’s agree on one thing: no one wants to be poor. I am reminded of an old quote by singer Billy Holiday. She once proclaimed that, “You can never be too rich or too thin.”

We also can agree that there is fraud and abuse in the system. How much, we really don’t know.

The EBT card took the place of food stamps, which were just that–coupons that you brought to a store to buy groceries. In addition to food stamps, people were also given a monthly stipend to buy clothes and pay some bills. In the electronic age we have switched to a swipe card system, which deducts benefits from a person’s account.

Now the claim is that there are ineligible folks getting benefits. There probably are. So let’s get them off the rolls, because there are others who may be more needy but can’t get benefits.

But these two steps, putting pictures on cards and getting ineligible people off the rolls won’t cure the larger problem.

The real problem: vendor fraud

See, no one wants to talk about what I see as the real fraud and that is vendor fraud. Let’s not blame the poor mother or the junkie, who is now classified as disabled for the problem.

Let’s put the blame where it lies–the storeowner who is taking the card and giving the poor and disabled pennies on the dollar for the card. What then happens it that the storeowner runs the card though their machine.

This is how the scam works. You have a card with $200 in benefits on it. The unscrupulous corner storeowner buys it from you for $100. Now you have $100 to buy whatever you want–lottery tickets, cigarettes, alcohol or drugs.

The storeowner then runs the card through for fictitious merchandise, netting himself a 50% profit. If they do this 10 times a week x 4 weeks in a month, they net themselves $4000 in extra income. And if they do it more than that, their take is even larger.

So then, why do we go after the cardholder? Because they are poor.

Time to crack down

The Department of Transitional Assistance needs to go after the vendors and they need to do it now. They need to hire investigators, if they don’t have enough of them. These investigators can be paid out of a fund created by a merchant fee on the EBT card scanners.

They also need to use all the technology at their disposal to track these bogus sales. Most purchases don’t end in even numbers for example. So the first thing the Department of Transitional Assistance needs to do is run a computer model and see how many stores have these kinds of purchases.

Unfortunately, most of the stores that are doing this are in poorer neighborhoods. They are also independently owned by individuals. So if we eliminate the large chain store, we can keep the universe to a manageable size.

If cost is a concern, we can do a Beta test, to see if it is worth the effort, which, I believe it is.

The final step to solving the problem is to strip the store permently of its EBT machine and criminally prosecute the storeowner, or the person stealing from the taxpayers.

As I stated in the beginning, putting pictures on EBT cards or punishing poor people is not going to stop the problem. Put as half dozen convenience store owners behind bars will.

Paul Giorgio is a longtime Democratic Party Activist who has worked on numerous campaigns. He was a Lead Advance Person for President Clinton & Vice President Gore. He was Deputy Director of Special Events for President Clinton’s first Inauguration. He has been elected a delegate to numerous Democratic National Conventions and recently served as one of President Obama’s representatives on the Platform Committee. In 2013 he was chosen as a Presidential Elector. He is the President of Pagio, Inc., publishers of Pulse Magazine, Vitality Magazine and Worcester Medicine.