Lawsuit against FDA, USDA seeks compensation for SNAP benefit skimming victims

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Since January 2022, an estimated 8,800 New Yorkers receiving SNAP benefits have fallen victim to skimming, a form of electronic theft. Now, a lawsuit filed in late February by the Legal Aid Society and Freshfields Bruckhaus Deringer US LLP is looking to change federal regulations to better protect New Yorkers whose benefits are stolen.

The complaint, filed against the United States Department of Agriculture and its Food and Nutrition Service on Feb. 22, points to regulations from 2010 that address reimbursement for lost and stolen benefits, but doesn’t specifically protect reimbursements for skimming and other electronic theft.

For people whose benefits from the Supplemental Nutrition Assistance Program — a federal food assistance program for low-income citizens — are stolen, the lack of reimbursement means waiting until the next month to replenish funds. In a news release announcing the lawsuit, Legal Aid stated that the wait for access to benefits and the lack of support following skimming cause frantic food insecurity for families.

“The poorest and most vulnerable people in the United States are the ones who don’t get reimbursed when, literally, the food is being taken out of their mouths,” Edward Josephson, a supervising attorney with the Civil Law Reform Unit at The Legal Aid Society, told The Daily Orange. “It’s outrageous.”

In New York state, there have been more than 10,000 documented instances of skimming, resulting in approximately $4 million in stolen benefits since January 2022, according to Josephson and recent data from the state’s Office of Temporary and Disability Assistance.

Before the implementation of SNAP Electronic Benefit Transfer cards, if a recipient’s physical food stamp coupons were stolen from the mail, the coupons would be replaced, Josephson said. But if stolen after being received, the cards could not be reimbursed. Josephson pointed to a federal law, the Food and Nutrition Act of 2008, which states that EBT benefits are supposed to be handled similarly to the old food stamp coupons.

“By analogy, the food stamp electronic benefits are being siphoned off before the people can use them, so they’ve never received them. It’s like they were stolen in the mail,” Josephson said. “What we’re asking the judge to do is to enforce that statute.”

To skim a consumer’s information, an offender will place a Bluetooth device, which looks deceivingly like a debit card reader, on an ATM or point-of-sale device, according to the complaint. Through the Bluetooth technology, the offender will be able to receive the victim’s credit or debit card number, as well as account information and personal identification number, after a card is swiped.

This method can duplicate a person’s SNAP EBT card and directly takes benefits from the government-controlled account, according to the complaint. Typically, the complaint says, the victims are not aware that the theft has occurred until they review their EBT balance or make their next purchase.

“Each one of those (stolen benefits) means there’s a poor family that goes to the grocery store, and they have all their groceries on the belt at the checkout, and then they go to buy the food and … their SNAP is gone,” Josephson said. “Then, they have no money to eat for the rest of the month.”

Professor Colleen Heflin, chair of the Department of Public Administration and International Affairs and associate dean of the Maxwell School of Citizenship and Public Affairs, explained that these stolen SNAP benefits have lasting effects on low-income New Yorkers, as the fraud is likely leading to an increase in food insecurity.

She said there’s plenty of evidence showing that even short-term food insecurity can lead to poor health outcomes, increased hospitalizations and poor academic performance.

“There are significant consequences for a household having their benefits stolen from them, and having to wait until the next month to have their benefits reloaded,” Heflin said.

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Congress provided partial relief to SNAP recipients through the 2023 Appropriations Act, which requires states to replace benefits that are stolen through card skimming, card cloning or similar fraudulent methods. But the act only applies to skimming instances after October 2022, and still doesn’t allow New York state to use federal funds to replace benefits, Josephson said.

Legal Aid’s case looks to include all people who were left out of December’s bill, Josephson said, and ensure that states are able to use their money elsewhere with the implementation of federal reimbursement programs.

Jenny Breen, an associate professor in SU’s College of Law, said that from a legal standpoint, the USDA’s position in drawing a distinction between having cards physically stolen and having funds stolen via skimming doesn’t seem to make a rational argument.

“The distinction that the agency is drawing right now, between physically having your cards stolen and having the funds stolen via skimming, does not seem to be a rational distinction to me,” Breen said.

Although the timeline of the lawsuit is hard to predict with such a recent filing, Josephson said, USDA has 30 days to respond in some way, which will be followed by an initial meeting between both parties in April.

USDA has not responded to a request for comment made March 2.

The complaint is filed as a class action lawsuit and specifically lists five individual plaintiffs, who Gary Pieples — a professor and director of the Criminal Defense Clinic at SU’s College of Law — said will serve as representatives for the larger population of SNAP users experiencing the impacts of benefit theft across the state.

Pieples also said that because of the procedures required for class action lawsuits of this scale, the process could end up taking longer.

“The point to a class action is for one lawsuit to recover the damages for a whole group of people, and so the court has to determine whether a class is appropriate, … who belongs in the class (and) whether the legal representation is adequate for the class, before they can go on to determine the actual merits of whether or not what the government’s doing here is in violation,” Pieples said.

Breen said that because Legal Aid is alleging damage to over 10,000 New Yorkers, the legal objective is to enable everyone who has had their benefits scammed to be reimbursed, not just the named plaintiffs in the lawsuit. Through the case, Josephson said the Legal Aid Society hopes to support families in New York and across the country by delivering actual restitution for the theft of benefits and consequent loss of food security.

“Even (losing) a month’s worth of SNAP benefits can cause significant hardship for a low-income family,” Heflin said. “It may seem like it’s not that big of a deal, but the implications for children, for older adults, for those with disabilities can really be far-reaching.”