Newsom highlights reduced EBT fraud after Trump’s threats

from Jeanne KuangCalMatters

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Two years after a wave of theft for public benefit that left low-income Californians struggling to pay rent and afford food each month, Gov. Gavin Newsom touted a significant drop in the amount reported stolen.

Thefts still totaled more than $4 million a month last fall in both the CalFresh food assistance and CalWorks cash assistance programs, according to a press release from Newsom’s office. It’s down since two years agowhen welfare 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 to the state’s introduction of 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,” he said in a press release.

Newsom’s office announced the improved theft numbers last week after the Trump administration stepped up threats to California over allegations of public benefit fraud. The president has used a wave of prosecutions of welfare fraud in Minnesota, some allegedly by immigrants, as a reason to send immigration agents to conduct aggressive raids in Minneapolis.

Earlier this month, the Trump administration froze some federal social services funding for five Democratic-led states, including California. Judge stopped freezingwhich included funds for the CalWorks cash assistance program, for now.

The type of fraud in which Newsom touts the reductions is not traditional “welfare fraud” perpetrated by public assistance recipients, but rather third-party theft. Local social services officers have said fraud by recipients is relatively uncommon.

Thieves are taking advantage of California benefit recipients by using hidden “skimming” devices to steal card numbers from EBT cards loaded with CalFresh food assistance and CalWorks cash benefits. Then they duplicate the cards and draining them of cash or make large purchases using CalFresh before recipients have a chance to use up their own benefits.

California was particularly vulnerable because of the size of the state’s social safety net, with approximately 300,000 families receiving cash assistance and 3 million receiving food assistance. CalMatters reported in 2023 that the state, previously focused on detecting fraud committed by benefit recipients, was also ignores warnings and delayed the proposal to introduce chipped EBT cards.

When the pandemic brought new benefits from the federal and state governments, such as increased unemployment benefits and stimulus checks, card-skimmer-wielding thieves followed the money. EBT cards, which at the time contained only a magnetic stripe, were among the most vulnerable to theft. Nearly 200 people have been charged in California in the EBT schemes, Newsom’s office said.

Since 2023, the state has responded to the skimming crisis by issuing chipped EBT cards and introducing an app that allows recipients to freeze their EBT accounts to prevent withdrawals. Last year, Newsom said, the state began using a computer model to detect fraudulent withdrawals and forcibly reset the EBT card PINs of some CalWorks recipients.

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 Social Media Fraud Investigators, said he believes reported theft in the state is understated.

The figures are based on the amount the state reimburses county welfare departments each month to return benefits to victims. But some recipients don’t bother to file a report or report thefts for months but get only a portion of the money refunded, Mahoney said.

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

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

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.