Newsom highlights reduction in EBT card fraud Newsom touts progress against EBT theft as Trump pressures blue states for benefit fraud

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Two years after a wave of theft of public goods that left many low-income Californians struggling to pay rent and buy food each month, Gov. Gavin Newsom announced a significant reduction in the reported stolen amount.

The thefts totaled more than $4 million a month last fall in both the CalFresh food assistance and CalWorks cash benefit programs, according to a news release from Newsom’s office. This number is smaller to the one from two years ago when public benefit recipients reported $20 million a month stolen from their accounts. The state uses taxpayer money to reimburse victims when they report theft.

Newsom attributes the decline in state enforcement to anti-fraud technology, such as more secure electronic benefit cards (EBTs) with electronic chips.

“In California, we’re leading the way by turning innovation into action, stopping theft and ensuring benefits reach those who really need them,” the governor said in a news release.

Newsom’s office announced an improvement in the number of robberies last week after the Trump administration stepped up threats to California over welfare fraud allegations. The president has used a flurry of legal proceedings of welfare fraud in Minnesota, some of which was allegedly committed by immigrants, as a pretext for sending immigration agents to conduct aggressive raids in Minneapolis.

Earlier this month, the Trump administration froze some federal funding for social services in five Democratic-controlled states, including California. a judge stopped freezing for now which includes funds for the CalWorks financial aid program.

The type of crime for which Newsom is touting the reductions is not traditional “welfare fraud” committed by public assistance recipients, but rather third-party theft. Local social services officers have stated this beneficiary fraud is relatively uncommon.

Thieves have targeted welfare recipients in California using hidden “skimming” devices to steal EBT card numbers loaded with CalFresh food assistance and CalWorks cash benefits. Then they duplicate the cards and they take their money or make large purchases with CalFresh before beneficiaries have a chance to spend their own benefits.

California was particularly vulnerable because of the size of its social safety net, with approximately 300,000 families receiving cash assistance and 3 million people receiving food assistance. CalMatters reported in 2023 that the state, previously focused on detecting fraud committed by benefit recipients, I, too, had ignored the warnings and delayed the proposal to introduce chip-enabled EBT cards.

When the pandemic brought new benefits from the federal and state governments, such as increased unemployment benefits and stimulus checks, thieves with card scanners had a field day. EBT cards, which then only had a magnetic stripe, were among the most vulnerable to theft. Nearly 200 people have been charged in California with EBT fraud, Newsom’s office said.

As of 2023, the state has responded to the data cloning crisis by issuing chip-enabled EBT cards and implementing an app that allows beneficiaries to freeze their EBT accounts to prevent withdrawals. Last year, according to Newsom, the state began using a computer model to detect fraudulent withdrawals and force the reset of some CalWorks beneficiaries’ EBT card PINs or access codes.

But local welfare fraud investigators said Newsom’s figures paint too rosy a picture of the theft.

Gregory Mahoney, president of the California Association of Welfare Fraud Investigators, said he believes reported thefts in the state are underreported.

The figures are based on the amount the state reimburses county welfare departments each month to return benefits to victims. However, some recipients don’t bother to report or report thefts for months but only receive a fraction of the refund, Mahoney explained.

He also criticized the California Department of Human Services for eliminating in 2023 the requirement that victims file police reports whenever their benefits are stolen in order to receive refunds. That has hurt the state’s tracking of theft and fraud, Mahoney said.

“This is not a systemic victory,” he declared. “This is a belated and partial mitigation of a crisis that has long been allowed to fester unchecked.”