Criminals developing an appetite 
for engaging in food-stamp fraud

It’s been said that it’s expensive to be poor and to some extent this is true. But it’s also expensive for a nation to have the sort of economic policies that keep a significant portion of its people poor. Not only does it raise the level of misery but, in our case, it makes a few rich and too many dependent, and it creates a criminal class profiting from the often ineffectual policies in place to help the poor.

One of the best examples of this problem takes place in the food stamp program, which is a sort of hybrid, involving federal money and state agencies to provide funds for needy people to eat properly. The government’s new name for this program is the Supplemental Nutrition Assistance Program (SNAP). If you want to see where our country has been headed over the last few years take a look at the growth of this plan.

In 2007 there were approximately 26.6 million people participating in the program. By July 2012 the number had grown to 46.7 million. In 2011 we spent over $76 billion on the assistance, up from the $30 billion that was spent in 2007.

In Colorado, the number of participants in the program increased 100 percent between July 2007 and July 2012. Furthermore, between July 2011 and July 2012 alone, the increase was 7 percent.

This July there were almost 500,000 Colorado residents receiving SNAP benefits.

Since states have replaced the traditional food stamp coupons with debit-type cards, there has been one growth sector — the banks charging fees when recipients use their cards at ATM machines to withdraw cash.

J.P. Morgan Chase has a contract with a number of states, including Colorado, to administer the use of these cards and it receives a transaction fee when they are used.

Last year, the bank received over $500 million in fees for administering these cards. Coincidentally, according to the website,, J.P. Morgan donated $808,000 to the Obama campaign.

While banks receive fees for administering the accounts of the cardholders, they are not charged specifically with determining the usage of the funds. Many readers may recall earlier this year, when it was discovered that a significant number of Colorado transactions had been occurring at liquor stores, adult venues and casinos.

State and federal investigators tasked to look into these problems are mysteriously sparse, compared to the number of issues.

Even the left-leaning website, The Daily Beast, points out that the federal government is dedicating just “over 100 inspectors to police the nearly 200,000 retailers nationwide that accept EBT cards.”

Big, administration-friendly banks aren’t the only ones making money off this expensive and out-of-control program. There’s plenty of criminal activity as well, since the lax oversight is leading to a thriving business online for individuals looking to trade their EBT cards for cash.

Some new rules are being implemented to try to prevent transactions taking place at certain venues. This means a revival in the old practice of trading the government-issued material for cash at a discount. Where better to do that than online, where advertisements can be seen for individuals looking to trade their EBT cards for cash. shows one such ad: “I have $70 worth of food stamps for sale for $40. Email this ad if you are interested. PRICE IS FIRM.”

Since anyone in the family can use an EBT card, there is no requirement for presentation of identification and existing law allows recipients to receive a replacement card if they are lost or stolen.

Lack of enforcement of existing regulations hurts the people the program is supposedly trying to help the most. Honest citizens who try to comply with the law are put at a disadvantage by their less scrupulous neighbors and, since there is little investigation or enforcement occurring, more criminal activity is attracted to the program.

A government with bad policies creates poor people and, for some reason, this administration cares very little about the integrity of this program.

Many people have speculated that statist governments wish for more dependency from their people. They just don’t seem to mind what comes along with it.

Rick Wagner writes more on politics at his blog, The War on Wrong.


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