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SNAP recipients have sued the USDA to undo a rule that bars New York from using federal funds to replace stolen food stamp dollars. A ruling could set a nationwide precedent.
In a lawsuit that could have national implications, anti-poverty advocates are suing the U.S. Department of Agriculture to require that New York state replace food stamp dollars stolen through a scam called skimming.
Under the lawsuit filed Wednesday, the anti-poverty group Legal Aid Society is asking that an “arbitrary and capricious” rule that bars New York from using federal Supplemental Nutrition Assistance Program (SNAP) dollars to replace the stolen funds be eliminated.
If the court should agree, it would set a precedent for courts nationwide to order the Agriculture Department to do the same in other states, said Legal Aid Society attorney Edward Josephson.
Under skimming, scammers steal food stamp dollars by placing a device next to where benefit recipients swipe electronic benefits transfer (EBT) cards to pay for groceries. These cards do not have the so-called EMV chip technology that is common in debit and credit cards and make it harder for fraudsters to steal critical information.
A ruling in Legal Aid Society’s favor would go further than a recent attempt by Congress. As part of the $1.7 billion omnibus spending bill passed in December, Congress requires states to reimburse SNAP recipients who have been victims of skimming. It also allows states to use federal SNAP dollars to pay for it. States have until Feb. 27 to submit plans to the Agriculture Department on how they will reimburse recipients.
While Josephson applauds the move by Congress, he says it “falls far short of what is needed.”
The federal spending law only applies to those who had their benefits stolen between Oct. 1, 2022, and September 2024. But going back to January 2022—10 months before the requirement in the omnibus bill takes effect—through the first half of February 2023, $4.7 million in SNAP benefits were stolen through skimming, according to the lawsuit.
In addition, the omnibus law only allows for up to two months of stolen benefits to be returned. ”Many will not be made whole for losses they are not responsible for and cannot control,” the lawsuit said.
The lawsuit was filed on behalf of five New York state SNAP recipients, who lost benefits to skimming before Oct. 1, 2022. One of the plaintiffs, Haiyan Chen, a 42-year-old single parent in Brooklyn, New York, relies on food stamps to support four children on the roughly $21,000 she earns as a server in a restaurant.
In June 2022, according to the lawsuit, Chen bought groceries at a Costco. When she later checked her account, she saw that her SNAP balance had dropped from $3,900 to just $2.
“After her benefits were stolen, Ms. Chen experienced extreme distress and shock. She turned to charities for food donations, lined up outside of a church far from home and relied on excess food shared by a friend,” the lawsuit said. ”Ms. Chen continues to have trouble eating and sleeping due to the fear and anxiety caused by losing the critical funds needed to feed her children.”
The lawsuit alleges that the Agriculture Department’s rules have not kept pace with technology and unfairly punishes them.
Before the federal food stamps program began issuing EBT cards in 1996, SNAP recipients were given paper coupons that they could redeem at stores. States were allowed to reimburse recipients if their coupons were stolen before they received them in the mail.
But when recipients started receiving EBT cards, the Agriculture Department in 2010, put in tighter requirements. States are only authorized to reimburse recipients if they have lost groceries to "household misfortune" or if their EBT card was “lost or stolen.” That people can be reimbursed if their card is lost or stolen but not if they are the victims of skimming “defies any reason,” said the lawsuit, urging the rule be eliminated.
The Agriculture Department did not return requests for comment.
Kery Murakami is a senior reporter for Route Fifty.