EBT benefit fraud prevention

7 U.S.C. § 2016a

• Title: 7 — Agriculture
• Chapter: 51 — SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM

Text

(a) Guidance; rulemaking
The Secretary shall—
(1) issue guidance to State agencies, on an ongoing basis, as informed by the process outlined in paragraph (4), that describes security measures that—
(A) are effective, as determined by the Secretary, in detecting and preventing theft of benefits, including through card skimming, card cloning, and other similar fraudulent methods;
(B) are consistent with industry standards for detecting, identifying, and preventing debit and credit card skimming, card cloning, and other similar fraudulent methods; and
(C) consider the feasibility of cost, availability, and implementation for States;
(2) promulgate regulations through notice-and-comment rulemaking to require State agencies to take the security measures described in the guidance issued under paragraph (1);
(3) not later than December 1, 2023, promulgate regulations (including an interim final rule) to require State agencies to implement procedures for the replacement of benefits consistent with subsection (b);
(4) coordinate with the Administrator of the Administration for Children and Families of the Department of Health and Human Services, the Attorney General of the United States, State agencies, retail food stores, and EBT contractors—
(A) to determine—
(i) how benefits are being stolen through card skimming, card cloning, and other similar fraudulent methods;
(ii) how those stolen benefits are used; and
(iii) the locations where card skimming, card cloning, and other similar fraudulent methods are taking place;
(B) to establish measures, including equipment enhancements for retail food stores, to prevent benefits from being stolen through card skimming, card cloning, and other similar fraudulent methods; and
(C) to establish standard reporting methods for States to collect and share data with the Secretary on the scope of benefits being stolen through card skimming, card cloning, and other similar fraudulent methods; and
(5) not later than December 1, 2024, submit to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives a report that includes—
(A) information on the frequency of theft of benefits and the location of those thefts, including benefits stolen through card skimming, card cloning, and other similar fraudulent methods;
(B) a description of the determinations made under paragraph (4)(A), the measures established under paragraph (4)(B), and methods established in paragraph (4)(C);
(C) a description of the industry standards described in paragraph (1)(B);
(D) a comparison of State plans related to reimbursement, prevention, and other relevant procedures approved in accordance with subsection (b)(1)(A); and
(E) recommendations on how to consistently and proactively detect, track, report, and prevent theft of benefits, including benefits stolen through card skimming, card cloning, and other similar fraudulent methods.
(b) Replacement of benefits
The Secretary shall use funds appropriated under section 2027 of this title to require States to replace benefits that are determined by the State agency to have been stolen through card skimming, card cloning, or similar fraudulent methods, subject to the conditions that—
(1) the State agency shall submit to the Secretary not later than 60 days after December 29, 2022, for prior approval a plan for the replacement of stolen benefits that—
(A) includes appropriate procedures, as determined by the Secretary, for the timely submission of claims to, timely validation of claims by, and replacement issuance by the State agency that includes—
(i) a signed statement by the affected household on the benefit theft, consistent with the signature requirements and options provided by section 2020(e)(2)(C) of this title;
(ii) criteria to determine if a submitted claim is valid;
(iii) procedures for the documentation of replacement issuances, including the submitted claims and findings from the validation;
(iv) the submission of data reports on benefit theft and replacement activity to the Secretary;
(v) procedures to inform households of their right to a fair hearing, consistent with those already established by section 2020(e) of this title and corresponding regulations concerning replacement issuances; and
(vi) the State agency's use and planned use of benefit theft prevention measures, including any additional guidance that may be issued under subsection (a)(1);
(B) includes appropriate procedures, as determined by the Secretary, for reporting the scope and frequency of card skimming affecting households within the State to the Secretary;
(C) upon approval shall be incorporated into the State plan of operation required under section 2020(e) of this title; and
(D) the Secretary may approve after the date on which guidance is issued under subsection (a)(1);
(2) the replacement of stolen benefits for a household—
(A) shall not exceed the lesser of—
(i) the amount of benefits stolen from the household; or
(ii) the amount equal to 2 months of the monthly allotment of the household immediately prior to the date on which the benefits were stolen;
(B) shall not occur more than 2 times per Federal fiscal year per household by a single State agency; and
(C) shall only apply to benefits stolen during the period beginning on October 1, 2022, and ending on December 20, 2024;
(3) plans approved under paragraph (1) will remain in effect until the effective date of the rule promulgated pursuant to subsection (a)(3); and
(4) replacements of benefits under this section shall not be regarded as losses for the purpose of section 2016(e) of this title to the extent such replacements are made in accordance with an approved plan that complies with this subsection.
(c) Definitions
In this section, the terms "allotment", "benefit", "household", "retail food store", and "State agency" have the meaning given those terms in section 2012 of this title.
(d) Rescission
Of the unobligated balances made available for the Supplemental Nutrition Assistance Program as authorized by section 1101(b)(1) of the American Rescue Plan Act of 2021 (Public Law 117–2), $8,000,000 is hereby rescinded.
(e) Comptroller General
Not later than 1 year after September 26, 2024, the Comptroller General of the United States shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that examines risks related to supplemental nutrition assistance program electronic benefit transfer payment system security, including the risk of stolen benefits through card skimming, card cloning, and other similar methods.
The report under paragraph (1) shall include an assessment of—
(A) the extent to which the Department of Agriculture manages payment system security, including risks related to stolen benefits, compared to leading industry practices;
(B) the manner in which States, retailers, and other relevant entities manage risks related to stolen benefits;
(C) the oversight of and guidance provided by the Secretary to States regarding stolen benefits; and
(D) recommendations and policy options for—
(i) improving how the Department of Agriculture and other relevant entities manage payment system security risks, including those related to stolen benefits; and
(ii) how the Department of Agriculture may best share those improvements with States, retailers, and other relevant entities.

History

(Pub. L. 117–328, div. HH, title IV, §501, Dec. 29, 2022, 136 Stat. 5985; Pub. L. 118–83, div. B, title I, §105, Sept. 26, 2024, 138 Stat. 1534.)

Editorial Notes

Editorial Notes

References in Text
Section 1101(b)(1) of the American Rescue Plan Act of 2021, referred to in subsec. (d), is section 1101(b)(1) of Pub. L. 117–2, title I, Mar. 11, 2021, 135 Stat. 15, which is not classified to the Code.

Codification
Section was enacted as part of the Consolidated Appropriations Act, 2023, and not as part of the Food and Nutrition Act of 2008 which comprises this chapter.

Amendments
2024—Subsec. (a)(4)(A)(iii). Pub. L. 118–83, §105(1)(A), struck out at beginning "to the maximum extent practicable,".
Subsec. (a)(5). Pub. L. 118–83, §105(1)(B)(i), substituted "December" for "October" in introductory provisions.
Subsec. (a)(5)(A). Pub. L. 118–83, §105(1)(B)(ii), struck out at beginning "to the maximum extent practicable,".
Subsec. (a)(5)(D). Pub. L. 118–83, §105(1)(B)(iii), (v), added subpar. (D). Former subpar. (D) redesignated (E).
Subsec. (a)(5)(E). Pub. L. 118–83, §105(1)(B)(iv), (vi), redesignated subpar. (D) as (E) and inserted "and proactively" after "consistently".
Subsec. (b)(2)(C). Pub. L. 118–83, §105(2), substituted "December 20, 2024" for "September 30, 2024".
Subsec. (e). Pub. L. 118–83, §105(3), added subsec. (e).

Statutory Notes and Related Subsidiaries

Definition of "Secretary"
Pub. L. 117–328, div. HH, §101, Dec. 29, 2022, 136 Stat. 5970, provided that: "In this division [see Tables for classification], the term 'Secretary' means the Secretary of Agriculture."