Hiding in the shadow of grocery stores, New York criminals stole billions of dollars in welfare money

According to the FBI, criminals attached hidden information-stealing devices to payment machines to collect electronic benefits transfer (EBT) card data, and used microscopic cameras or keypad overlays to record customers’ PIN codes. The stolen information was then used to create fake cards and withdraw Supplemental Nutrition Assistance Program (SNAP) benefits, costing consumers and financial institutions more than $1 billion each year.

SNAP is the US government’s largest food subsidy program, specifically for low-income families to buy essential foods such as vegetables, meat, and milk. Instead of issuing paper vouchers, the US government issues each household an EBT card, which looks and operates like an ATM card or bank debit card. Every month, SNAP benefits are automatically loaded onto EBT cards for people to swipe to pay at licensed supermarkets or grocery stores.

While most bank cards have switched to using high-security chips, many states in the US still issue EBT cards using the old black magnetic strip. This outdated technology has created opportunities for crooks to install reading devices, copy data and withdraw benefits from the poor.

Haywood Talcove, chief executive officer of LexisNexis Risk Solutions Government, a company that specializes in providing data analytics solutions, said he has seen many stores on the same street with shelves filled with expired food. This leads him to believe that some stores operate primarily to facilitate EBT card fraud rather than sell legitimate goods.

The New York Regional Office of the US Secret Service (which in addition to protecting the President is also responsible for investigating federal financial crimes and counterfeit currency) conducted a three-day operation across Brooklyn, the Bronx and Queens in June, discovering 35 illegal card cloning devices and preventing $36.5 million in fraud, marking their fourth anti-card cloning campaign in New York City this year.

Michael Peck, assistant special agent in charge of the Criminal Investigation Division of the US Secret Service, said in June that criminals hid up to $1.2 million in stolen cash in dishwashers before transporting them abroad. Those hired to install card duplicating equipment earn about $150 per machine.

Many of the organized crime groups behind the EBT card clones originate from Eastern Europe and are “living lavishly through this scam, renting $10,000-a-month apartments and owning Lamborghinis,” the Secret Service added.

Talcove said the practice is widespread and well-organized, not just limited to grocery stores and prepared food stores, but also spread to many other retailers “that fall into this category.” He also said the SNAP program does not require detailed records of purchases, making it more difficult to detect suspicious transactions.

Talcove called the fraud “the perfect ruse,” due to weak identity verification, outdated card technology and limited purchase records.

“First, you won’t get arrested, second, the government never runs out of money, and third, the SNAP program has fundamental flaws in management,” he cited.

Talcove said the “real victims here” are families who receive SNAP benefits but don’t get enough food. According to the Department of Agriculture, more than 250,000 retailers nationwide are authorized to accept SNAP benefits. Talcove says taxpayer money is being wasted.

In a statement to Fox News Digital, a spokesperson for the New York City Department of Social Services said the theft of EBT card information is a “nationwide crisis,” and said the city has been working closely with state officials and law enforcement to help “vulnerable” New Yorkers who may be affected.

New York Governor Kathy Hochul recently announced that the state will begin replacing current EBT cards with cards with more secure chips in early 2027 to help prevent fraud.