Updating TANF Restrictions

State EBT programs continue
to await DHHS' regulations
concerning where TANF benefits
may be accessed.

The EBT community continues to wait for the Department of Health and Human Services to issue its regulations governing the access and use of TANF benefit at certain proscribed locations-casinos, liquor stores and adult-entertainment establishments.


In the meantime, the eGovernment Payments Council's State Forum, under the direction of Vice Chair Cheryl Kagee, has conducted another survey of state EBT directors, the third over the last 12 months, on where states are regarding implementation of the HR 3630 regulations.

Only one state responding to the survey has implemented ATM restrictions since last March, the month following passage of the law requiring such restrictions. All states that have implemented ATM restrictions and which responded to the survey stated that they had implemented the restrictions to comply with recently adopted state laws.

It appears at this point that states that have not implemented cash restrictions are sitting on the sidelines waiting to see the final regulations from DHHS.

Another issue that arose in the survey involved non-TANF cash programs. Some 46 percent of states also use their EBT cards for the distribution of cash from other programs. Nearly 90 percent of those states say that they will apply the same access restrictions  to those program benefits as they will to TANF.

So, nearly a year into the TANF restriction issue, we're pretty much where we were when Congress first asked the General Accountability Office to look into the issue of misuse of TANF benefits. States are looking over their shoulder to Washington, waiting for the other shoe-TANF regulation-to drop. At the same time, they and their EBT processors continue to bat around the best way to implement the law.

Should be an interesting winter. 

It's the Party Pooper: USDA to Blast Fraudsters with a New Cache of Weapons

Reiterating his Department's "zero tolerance" policy towards fraud in the SNAP, program, formerly called food stamps, Under Secretary of Agriculture Kevin Concannon on Thursday announced a number of steps USDA is taking to crack down on benefit diversion and misuse.

The biggest change is that the Department is moving away from an "either/or" punishment for retailers who traffic SNAP benefits. Currently, retailers found to have trafficked in benefits face disqualification from the program or a financial penalty, but not both.

The Food & Nutrition Service within
USDA is the agency that oversees
and monitors the SNAP program,
formerly known as Food Stamps

The proposed new sanctions allow USDA to permanently disqualify a guilty grocer, plus hit him with a hefty fine on the way out the door.

In a release, Concannon stated that "These additional measures reaffirm our ongoing commitment to ensuring these dollars are spent as intended-helping millions of people in need get back on solid economic footing."

The new regulations would require states to take "specific actions" to nail fraudsters on the front end and to make sure ineligible applicants don't get certified to receive SNAP benefits.

USDA has been doubling down on fraud detection and control in the wake of increased oversight by the Administration and Congress. Recently the Department has:

• Sent letters to popular social media sites seeking to prevent Craigslist, Ebay, Facebook and Twitter from becoming an online flea market for buying and selling SNAP benefits
• Proposed regulations that would give states the option of making a recipient contact the state agency for a new card when there have been an excessive number of new card requests on an account
• Proposed tougher rules for so-called high-risk stores trying to get approval to redeem SNAP benefits
• Worked more closely with state and other federal agencies spreading the word about program violators

USDA has also launched a "Stop SNAP Fraud" web page to provide information on reducing fraud in the program. The site includes Frequently Asked Questions about fraud, details the Department's efforts to fight fraud, and includes instructions on reporting and fighting fraud. 

The GAO Weighs in on Restricting TANF Access

So stopping welfare recipients from getting their cash at ATMs in “vice” locations—liquor stores, casinos or strip clubs—may not be as easy as Congress thought. The Government Accountability Office has released its long-awaited report on restricting where EBT cards may be used to access Temporary Assistance for Needy Families benefits, commonly known as welfare.

Congress included the TANF restrictions in the bi-partisan Middle Class Tax Relief and Jobs Creation Act of 2012. The thinking seemed to be that because TANF is distributed in many states through electronic benefits cards that it would be easy to follow an electronic trail to see if beneficiaries were using their benefits in one of the sin sites.  One representative likened creation of this electronic trail to “throwing a switch.”

After studying the issue for half the year, the GAO isn’t so sure about that. Congress' consulting arm was pretty clear in its conclusions: 

• There’s not enough data in that electronic trail to track a beneficiary to the liquor store
• What data there is in that electronic trail isn’t all that accurate
• Some of the voluntary, non-electronic methods that states use to reduce the misuse of TANF funds and other subsidies seem to work better

 The GAO report had been requested by Sen. Susan Collins (R-ME), the ranking member of the Senate Committee on Homeland Security and Governmental Affairs.

 In its conclusions the GAO tracks closely to the white paper the Electronic Funds Transfer Association and its eGovernment Payments Council issued earlier this year.

 The GAO's methodology included reviewing documentation and interviewing officials in the ten states with the highest TANF block grants in terms of dollars. Together these states represent 66 percent of all TANF block grant dollars. The GAO also obtained EBT card-transaction data from four of the ten states in order to determine whether the transaction data could be useful in developing a systemic solution for tracking where TANF funds are accessed.

 GAO concluded that EBT transactional data are "not sufficiently reliable for the purpose of performing systematic monitoring of transactions in locations that are inconsistent with the purposes of TANF.” This was one of the conclusions reached in our white paper.

 Furthermore, GAO concluded that addressing these limitations in such a way as to make transactional data a useful tool in monitoring where EBT cardholders get and use their TANF funds could require "significant resources," another conclusion of our white paper.

 GAO suggested that states consider other non-systemic methods for identifying and monitoring where TANF is accessed and used, a position EFTA and the Council have advocated for some time.

 GAO has shared its findings with the Department of Health and Human Services, which is writing regulations on state compliance with a new federal law that mandates restricting TANF access in gaming establishments, liquor stores and adult-oriented businesses. Those regulations have yet to be published.

 Since late 2011 EFTA and the Council have sought to inform the regulatory process on this issue in a number of ways. Here’s what we did:

•  December 2011: Meeting with GAO
• January 2012: Conducting a survey of state EBT directors on benefit restrictions
• February 2012: Issuing our white paper on benefit restrictions
• March 2012: Having regulators from DHSS and the principal investigators from GAO speak at our eGPC meeting in Washington
• April 2012: Meeting again with the regulators and hosting a webinar on the regulatory process, in which the DHHS regulators participated
• May 2012: Conducting a second survey on TANF restrictions
• June 2012: Responding to the Department of Health and Human Services Request for Public Comment on the issue of TANF restrictions

No one is advocating that states should turn a blind eye to the diversion of benefit from their intended use of helping families get through the rough patches of life. Frankly, I think most people would be happy if there were a simple way to figure out which beneficiaries were using TANF to play the slots and which were using it to pay the rent.

TANF is a successful program because it gives states administrative flexibility to manage the program and provide a temporary lifeline to families in need. Families have to make choices about how to use a time-limited amount of money, and those choices can’t include wine, women and Keno. Whatever regulations DHHS comes up with, let’s hope they give states that administrative flexibility to come up with blocking solutions that actually, rather than theoretically, work.

If you’re interested in what GAO has to say on the subject, click here. 

It's Baaack!!! The Return of the X9.108 Smart Card Interface Standard

The Food and Nutrition Service has submitted a New Work Item (NWI) to the X9 standards group to have the old X9.108 Draft Standard for Trial Use (DSTU) revived and reviewed for eventual publication as an X9 ANSI Standard.  

X9 is an organization that develops standards for the financial industry. 

Standards organization X9 is looking for
states and developers to join a work group
on smart card standards.

FNS expects the workgroup to begin its review in December or January.

FNS has a couple of questions for states interested in this effort. If you represent a state, the agency would like to know if you are able to participate in this effort. Participating would mean  your state joining an X9AB work group. 

Second, FNS would like to know if there are any retail developers out there who have already implemented the DSTU or a version of it. If you're not a developer, do you know any who are?

Participating in this effort will require membership in X9. If you're interested in X9 and the workgroup, click here. 

e-Gov Payments Report Now Available

The second edition of the eGovernment Payments newsletter, e-Gov Payments Report,  has been published. This edition features articles on TANF regulations and the latest news about EBT projects around the country. It's available on the website of the Electronic Funds Transfer Association, or by clicking here.

Novo Dia Rolls Out Famers Market Mobile Payment Solution to Michigan

eGovernment Payments Council member Novo Dia Group, Inc., a software development firm specialized in the health and human services industry, has deployed 325 iPod touch devices 26 farmers markets in Michigan, according to the company. 

The Novo Dia application enables market vendors to accept several types of benefits cards. These include SNAP, WIC and WIC EBT cash-value benefits,  the summer EBT for Children program and Farmers Market Nutrition Program (FMNP) benefits. 

The application, running on the iPod touch solves the problem of cost-effective EBT access for farmers markets. In many farmers markets all vendors share a single EBT terminal or rely on a system of physical “tokens” which customers purchase at the terminal and pay for food with at the individual vendor’s stall. 

The new device has a magnetic-card reader attached which allows the iPod to be used like a regular debit card terminal.  It runs Novo Dia’s "Mobile Market+" software.

"Before, our vendors missed out on most WIC and SNAP purchases since they had no equipment to process electronic benefit cards within their stands. Thanks to the Mobile Market+ solution, vendors can process card transactions on the spot," says Joe Lesausky, of the Fulton Street Farmers Market. 

"The Mobile Market+ solution is specifically developed for places with no access to phone lines, networks or electricity," according to Novo Dia. The Mobile Market+ application is approved by Apple and USDA. Approved vendors using the solution download the app directly from the Apple App Store.

Breaking: Senate Walks Back Effort to Block Grant SNAP

By a nearly 2-1 margin the Senate today tabled an amendment by Sen. Rand Paul (R, KY) to block grant the SNAP, formerly Food Stamp, program.

The vote was 65-33 with two abstentions.

Restricting TANF Access

EFTA and the eGovernment Payments Council have provided their comments to the Department of Health and Human Services on the agency's impending rules for restricting access to TANF benefits. To see the EFTA/eGPC comment letter, click here.

eGPC has spent a great deal of time over the last six months on this issue. This included two nationwide surveys, a white paper, and a webinar. Our goal has been to inform the rules-making process so that the rules developed by DHHS actually accomplish the goals of the legislation in such a way that the administration of public funds for eligible households is not adversely affected.

Our fear has been that without a firm understanding of the problem and how public benefits are administered any resulting restrictions on TANF use may be only sporadically effective and could be discriminatory against TANF participants who play by the rules. Compliance with the Section 4004 requirements, as they're called, could also sap valuable resources from the administration of public aid in many states.

We believe that the most effective way to achieve the goals of the Middle Class Tax Relieve and Job Creation Act (Section 4004) is to give states maximum flexibility in developing and managing their own plans that work best for their states and their program participants This is definitely not a situation where one size fits all.

That's how we see it. Check out our comments and let us know if you agree.

WIC EBT Retail Certification Procedures

The summary of comments received on the WIC EBT Retail Certification Procedures draft Version 2.1 have been posted to FNS' Partnerweb. Click here to access.  

New EBT RFP Posted

Just posted this past week: an Invitation to Negotiate an electronic benefits transfer contract with the State of Florida. Bidders need to have substantial EBT and/or processing experience. Interested? Click here for the link to the RFP. Proposals are due by June12.

Time to Comment on Section 4004: TANF Access Restrictions

In our last post ("Liquor and Lap Dances: Regulating Bad Behavior," April 28, 2012) we discussed the issues raised in the recent Electronic Funds Transfer Association webinar on restricting access to TANF in certain locations. These locations include liquor stores, casinos and adult-entertainment venues.

Section 4004 of the recently signed Middle Class Tax Relief and Jobs Creation Act of 2012 requires states to prohit the use of EBT cards to access TANF benefits in these locations.

The matter is now in the hands of the Department of Health and Human Services' Administration for Children and Families. ACF, which administers TANF, is currently engaged in writing regulations to implement Section 4004.

In this short interview, Kurt Helwig, president and CEO of EFTA discusses the difficulty that ACF will face in regulating this complex issue, and the role that states and EBT providers can play by responding to DHHS' reccently released Request for Public Comment, the first step in the regulatory proccess.

Liquor and Lap Dances: Regulating Bad Behavior

More than 100 people attended this week's EFTA webinar on complying with the new federal law that requires states to restrict access to TANF benefits in specific locations. The Middle Class Tax Relief and Jobs Creation Act of 2012, signed by Pres. Obama in February includes a section, number 4004, that requires states to prohibit TANF beneficiaries from accessing their benefits in liquor stores, gaming locations and adult-entertainment venues.

States are required by 2014 to submit a report to the Department of Health and Human Services on how they have complied with the law. States that fail to adequate comply face the loss of up to five percent of their TANF block grant.

DHHS is the federal agency that oversees the TANF program. Since the new law provides for monetary penalties, DHHS must conduct a formal rules-making process to establish regulations for complying with the intent of Congress, according to the agency.

The webinar was hosted by the Electronic Funds Transfer Association and CO-OP Financial Services. It was divided into four sections:

1. The legislative background of the law
2. The regulatory process that is now underway
3. How states are complying with similar blocking state-level blocking laws
4. Alternatives to "systemic" blocking solutions

A veteran panel discussed these four issues at length. Dennis Ambach, the senior director of government relations for EFTA, explained the origin of the bill and similar state-level movements to restrict the use of TANF. Mark Greenberg, the deputy assistant secretary for policy in the Administration for Children and Families, explained in detail the regulatory process that will produce the rules that will guide states in their compliance with the law. ACH is the branch of DHHS that administers TANF.

The EBT director for the State of Colorado, Scott Barnette, presented his state's experience in restricting access to TANF and benefits from a host of other government programs. Finally, John Simeone, executive director for JP Morgan Public Sector Prepaid Cards talked about the issues involved with trying to block access to TANF by "throwing a switch" on ATM machines. (Hint: The switch doesn't exist.)

There have been just a few seminal milestones that have marked the path of EBT. The first was creation of the first set of operating regulations in 1992. Another was Congress' willingness in the late 1990s to appropriate money so that EBT transactions could be interoperable across the country. How the Section 4004 regulations are writen will be one of those milestones.

The regulators at DHHS face a thankless task in trying to control access to TANF. Most Americans share Congress' disgust with knowing that money that was appropriated to clothe poor children and keep a roof over their heads is going instead to pay for liquor and lap dances. But implementing the law will be tricky. Compliance costs may in the end exceed the amount of money that is currently being diverted to spirits, slots and strippers.

So DHHS will have to balance such factors as cost and benefit, access and fees, and the carrot and stick of enforcement.

Here are just three of the issues that regulators will have to consider over the next several months:

Whether systemic solutions are cost effective. Results in two states have shown that the amount of TANF benefits flowing through proscribed categories of merchant is in each case less than one-half of one percent of the total amount of benefits distributed. Human services agencies have no regulatory authority over alcohol retailers, gaming or adult entertainment. In at least one state, staff time was devoted to scanning Yellow Pages to make lists of liquor stores and strip clubs to contact directly. The manpower required to implement the law could be staggering.

Whether regulations may end up reducing access for all beneficiaries. Even when a state is able to locate and contact business owners who agree to block acceptance of EBT cards at ATMs in those locations, it's not the end of the story. ATMs are mobile assets. An ATM may be replaced by one whose terminal ID has not been blocked. Or a terminal with a blocked ID may end up in a lawful location where beneficiaries may be blocked from using it.

And in remote areas of the country, for example, western states in the lower 48 and Alaska, there are places where a prohibited location may be the only location within 50 or 100 miles of where a beneficiary lives. Prohibiting that location may place an undue hardship on the beneficiary.

And what about Indian casinos? Recognized Indian nations and tribal authorities under the Indian Gaming Regulatory Act of 1988 control gaming within their territory. So the requirements of Section 4004 of the new law might not be enforceable in Indian casinos. This could cause the regulations to be applied in a discriminatory manner. One beneficiary may face a 25-mile drive to an ATM because a casino is now off limits for benefit access, while another beneficiary may hop on the Interstate, get off at the next exit and pull into an Indian casino with her EBT card.

Regulators are concerned about access costs. But we know that cost and access are code words for supply and demand. ATM owners in some areas may find that blocking these transactions may make it economically unfeasible to keep their machines in those locations. They may redeploy their machines to more profitable locations. As the supply of ATMs diminishes, will the owners of remaining machines raise their surcharges? If so, compliance with the law will result in less access and higher cost for all beneficiaries. As the supply of access points decreases, the cost of remaining access points increases.

Fairness of sanctions. States that fail to comply with the law could be sanctioned with the loss of up to five percent of their TANF block grant. But whom does this affect? Not the liquor store owner who sold a pint of bar whiskey to someone who paid with TANF funds. Not the casino owner who knowingly allowed access to TANF funds so that in three hands of blackjack the beneficiary's family support money was in his till. Not the stripper who steps off the bar with TANF cash in the waistband of her G-string.

Section 4004 sactions could end up harming the vast majority of program beneficiaries who play by the rules. A sanctioned state will be forced to make up the five percent reduction in its TANF grant by cutting other programs to use that money to meet its TANF obligation. Which programs? Maybe reduce the hours for school nurses. Maybe buy fewer assisted living devices for the disabled. Or maybe layoff the interpreters at the blind commission. Who knows?

Sanctions should not end up indirectly harming beneficiaries who play by the rules. States should comply with the new federal law by passing their own legislation that will allow them to better enforce how and where these benefits are accessed and spent. Gaming commissions should be responsible for making sure that the casinos, bingo-halls and poker clubs they oversee don't allow TANF funds to be accessed in those locations. If these businesses circumvent the gaming commission's regulations the businesses could face loss of their licenses. The same for liquor stores.

Congress did the right thing by trying to turn the focus on TANF benefits back to children and families. But regulators will have to have the leadership of Moses, the wisdom of Solomon and the patience of Job to get this one right.

DHHS will have to absorb a great deal of information in a very short period of time in order to craft regulations that don't negative impact anyone but the bad actors. And states, in their compliance plans, will have to show that they can apply the proper pressure to those bad actors in order to regulate access to and use of TANF in the manner Congress intended when it created the program.

The National Survey of WIC Participants II Just Published

The Food and Nutrition Service has just published a new report to its website, The National Survey of WIC Participants II. The report provides information on such topics as policies, procedures and operations at state and local WIC agencies and estimates of improper payments. If interested click over to the FNS website for a look. http://www.fns.usda.gov/ora/MENU/Published/WIC/WIC.htm

WIC Position Available

FNS has begun a search for a Supervisory Program Analyst. This is the position currently held by Patty Davis who will be retiring this spring. For more information or to apply, interested candidates should visit the government's USA Jobs website at http://www.usajobs.gov/GetJob/ViewDetails/313523000#duties.

Building a Healthy America: a SNAP Profile

USDA has just published Building a Health America: A Profile of the Supplemental Nutrition Assistance Program. The publication provides a pretty well rounded picture of SNAP, especially for those who many not know a lot about the program. As EBT professionals, what we do is fairly unique. This might be a good handoff or leave-behind to help explain SNAP. It begins with a nice overview and includes a decent explanation of SNAP EBT. If you're interested, here's the link:
http://1.usa.gov/HCBeLS.

Do We Have a Data Security Crisis in America?

Every day EBT systems handle millions and millions of pieces of consumer data. The recent security breach at Global Payments once again has us thinking exactly how secure are our data - both professional and personal. And how concerned are Americans with data breaches? Has the steady stream of breaches inoculated Americans to the dangers that data breaches present? And where is Congress in all this?

Dennis Ambach, Senior Director in charge of government relations for the Electronic Funds Transfer Association, has some interesting observations and analysis in today's PaymentTrends, the official EFTA blog. If you're interested, check it out at   http://bit.ly/tOiKi9.

Pennsylvania House Looks to Set Rules on Use of EBT Cards

The Pennsylvania House holds a hearing today on H.R. 1948, a bill that would create a standing body to oversee EBT in the Commonwealth.

The bill would create the "Electronic Benefits Transfer Card Management Program," which would set rules and regulations on what could be purchased with EBT cards. The EBT Card Management Program would also have oversight authority on the use of the cards.

The bill is aimed at cracking down on fraudulent use of cash assistance, as well as use of cash assistance for buying things inconsistent "with the purpose of public assistance," according to Rep. Tim Krieger (R-Delmont), the bill's sponsor.

Under the measure the Department of Public Welfare, which administers the cash assistance programs and EBT in the Commonwealth, would be required to develop "electronic controls" to detect misuse of TANF benefits through the EBT program, according to a press release issued by Krieger.

Pennsylvania joins a growing list of states that have passed, or are considering, legislation that would regulate the use of state-issued EBT cards. The Middle Class Tax Relief and Job Creation Act of 2012, passed by Congress on February 17, requires states to prevent the use of TANF funds in liquor stores, casinos and adult entertainment businesses.  

The bill provides regulatory authority for DPW to determine what types of purchases are acceptable with cash assistance, and to make sure such purchases are consistent with the program's "mission of encouraging self-sufficiency," says the bill's sponsor.

Pennsylvania distributes approximately $200 million in cash assistance each month.

Hearing Set for Next Week on Mandatory WIC EBT Bill in California

The Committee on Health in the California Senate will hold a hearing April 11 on a bill that would require California to adopt electronic benefits transfer for its WIC program. Although all states are required by the federal Healthy Kids Act of 2010 to adopt WIC EBT by 2020, the California bill would require adoption of EBT by January 1, 2015.

The bill, sponsored by Sen. Lori Hancock, would extend to July 1, 2013 the deadline for the state to complete its feasibility study on WIC EBT. It would also require the Department of Public Health to report back to the legislature at that time on what electronic card technology option it has chosen for EBT.

The implementation date of January 1, 2015 is contingent on funding, according to the bill.

Analyzing the Legislative Language of TANF Transaction Blocking

Section 4004 of the Middle Class Tax Relief  and Job Creation Act of 2012 requires state agencies to block somehow the use of EBT cards for accesssing TANF benefits in liquor stores, casinos and adult entertainment businesses.

In an interview at a recent meeting of the Electronic Funds TransferAssociation Board of Directors Dennis Ambach, EFTA legislative director, analyzes the language of the bill and what it might mean for states.

Dennis Ambach is the Legislative Director of

the Electronic Funds Transfer Association and

the eGovernment Payments Council. He

explains the legislative requirements of

Section 4004 of the Middle Class Tax Relief

and Job Creation Act of 2012

Announcing the Launch of a New Farmers Market Advisory Group



The new Farmers Market Advisory
Group wants to expand SNAP and WIC
access to the nation's farmers markets.
Image courtesy of USDA



Jan Walters, of Jan Walters Consulting, announced last week that she and Ames Robb, the SNAP director for the state of Vermont, have started a Farmers Market Advisory Group.

The mission of the group will be to assist states on developing farmers market solutions for the SNAP and WIC programs. The goal is to increase access to farmers markets for participants of both programs.

There are several successful EBT operations across the country," says Ms. Walters. "We want to share that knowledge with states and organizations who wish to expand EBT access at farmers markets."

For more information, visit http://www.ebtmarketsolutions.com/.

Yet Another New EBT Law Proposed; This Time in California

A bill recently introduced in the California General Assembly would indemnify holders of state EBT cards in the event their cards were "skimmed." Skimming is an illegal practice whereby a thief captures the account number and PIN associated with an electronic card and uses that data to gain access to the funds the legitimate card was designed to access.

Following  is the text of the bill:

BILL NUMBER: AB 2035   INTRODUCED

        BILL TEXT

INTRODUCED BY   Assembly Member Bradford

                        FEBRUARY 23, 2012

   An act to amend Section 10072 of the Welfare and Institutions

Code, relating to public social services.

        LEGISLATIVE COUNSEL'S DIGEST

   AB 2035, as introduced, Bradford. Electronic benefits transfer

cards: skimming.

   Existing law, administered by the State Department of Social

Services, provides for the establishment of a statewide electronic

benefits transfer (EBT) system for the purpose of providing financial

and food assistance benefits to needy Californians. Under existing

law, a recipient does not incur any loss of electronic benefits if

his or her EBT card or personal identification number has been lost

or stolen.

   This bill additionally would provide that a recipient would not

incur any loss of electronic benefits stolen through the practice of

skimming, as defined.

   By increasing duties of counties in administering public social

services programs, this bill would impose a state-mandated local

program.

   The California Constitution requires the state to reimburse local

agencies and school districts for certain costs mandated by the

state. Statutory provisions establish procedures for making that

reimbursement.

   This bill would provide that, if the Commission on State Mandates

determines that the bill contains costs mandated by the state,

reimbursement for those costs shall be made pursuant to these

statutory provisions.

   Vote: majority. Appropriation: no. Fiscal committee: yes.

State-mandated local program: yes.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares as follows:

   (a) State law provides relief for CalWORKs parents and recipients,

to restore their benefits when stolen.

   (b) However, no similar remedy exists when the benefits are

delivered in electronic form, via an electronic benefits transfer

(EBT) card, and the benefits have been stolen through the practice of

skimming.

   (c) Countless families that depend on the basic needs grants

CalWORKs provides are vulnerable to electronic crimes, and currently

have no where to turn.

   (d) Because of this inequity, a petition for writ of mandate,

Carpio v. Lightbourne (Case No. BS135127) was filed in the Los

Angeles County Superior Court in December 2011, to address a solution

for families that have been victims of skimming.

   (e) It is therefore the intent of the Legislature in enacting this

act to address the problem of electronic theft of public benefits

that is at issue in Carpio v. Lightbourne.

  SEC. 2.  Section 10072 of the Welfare and Institutions Code is

amended to read:

   10072.  The electronic benefits transfer system required by this

chapter shall be designed to do, but not be limited to, all of the

following:

   (a) To the extent permitted by federal law and the rules of the

program providing the benefits, recipients who are required to

receive their benefits using an electronic benefits transfer system

shall be permitted to gain access to the benefits in any part of the

state where electronic benefits transfers are accepted. All

electronic benefits transfer systems in this state shall be designed

to allow recipients to gain access to their benefits by using every

other electronic benefits transfer system.

   (b) To the maximum extent feasible, electronic benefits transfer

systems shall be designed to be compatible with the electronic

benefits transfer systems in other states.

   (c) All reasonable measures shall be taken in order to ensure that

recipients have access to electronically issued benefits through

systems such as automated teller machines, point-of-sale devices, or

other devices that accept electronic benefits transfer transactions.

Benefits provided under Chapter 2 (commencing with Section 11200) of

Part 3 shall be staggered over a period of three calendar days,

unless a county requests a waiver from the department and the waiver

is approved, or in cases of hardship pursuant to subdivision (  l

).

   (d) The system shall provide for reasonable access to benefits to

recipients who demonstrate an inability to use an electronic benefits

transfer card or other aspect of the system because of disability,

language, lack of access, or other barrier. These alternative methods

shall conform to the requirements of the Americans with Disabilities

Act (42 U.S.C. Sec. 12101, et seq.), including reasonable

accommodations for recipients who, because of physical or mental

disabilities, are unable to operate or otherwise make effective use

of the electronic benefits transfer system.

   (e) The system shall permit a recipient the option to choose a

personal identification number, also known as a "pin" number, to

assist the recipient to remember his or her number in order to allow

access to benefits. Whenever an institution, authorized

representative, or other third party not part of the recipient

household or assistance unit has been issued an electronic benefits

transfer card, either in lieu of, or in addition to, the recipient,

the third party shall have a separate card and personal

identification number. At the option of the recipient, he or she may

designate whether restrictions apply to the third party's access to

the recipient's benefits. At the option of the recipient head of

household or assistance unit, the county shall provide one electronic

benefits transfer card to each adult member to enable them to access

benefits.

   (f) The system shall have a 24-hour per day toll-free telephone

hotline for the reporting of lost or stolen cards and that will

provide recipients with information on how to have the card and

personal identification number replaced.

   (g)  (1)    A recipient shall not incur any loss

of electronic benefits after reporting that his or her electronic

benefits transfer card or personal identification number has been

lost or stolen  ,   or that he or she is a victim of

skimming, as defined in paragraph (2) . The system shall provide

for the prompt replacement of lost or stolen electronic benefits

transfer cards and personal identification numbers. Electronic

benefits for which the case was determined eligible and that were not

withdrawn by transactions using an authorized personal

identification number for the account shall also be promptly

replaced.

   (2) The State Department of Social Services shall establish a

protocol for reporting skimming that minimizes the burden on a

recipients. For purposes of this section, "skimming" means a form of

identity theft by which a recipient's EBT account information, or

"pin" number, or both, are electronically accessed by a third party

who uses that information to unlawfully remove funds from the

recipient's account.

   (h) Electronic benefits transfer system consumers shall be

informed on how to use electronic benefits transfer cards and how to

protect them from misuse.

   (i) Procedures shall be developed for error resolution.

   (j) No fee shall be charged by the state, a county, or an

electronic benefits processor certified by the state to retailers

participating in the electronic benefits transfer system.

   (k) Except for CalFresh transactions, a recipient may be charged a

fee, not to exceed the amount allowed by applicable state and

federal law and customarily charged to other customers, for cash

withdrawal transactions that exceed four per month.

   (  l  ) A county shall exempt an individual from the

three-day staggering requirement under subdivision (c) on a

case-by-case basis for hardship. Hardship includes, but is not

limited to, the incurrence of late charges on an individual's housing

payments.

  SEC. 3.  If the Commission on State Mandates determines that this

act contains costs mandated by the state, reimbursement to local

agencies and school districts for those costs shall be made pursuant

to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of

the Government Code.                                           

Payroll Tax Holiday Bill Spells Confusion for States' Benefits and Payment Card Programs

H.R. 3567, which would, in effect, mandate ATM Blocking, has been sucked up into Congress' payroll tax holiday bill along with some other measures. This creates an omnibus-type bill that addresses a number of issues prior to Congress' one-week adjournment for the Presidents Day holiday.

In addition to the mandate to block ATM transactions that allow TANF recipients to access those funds  in liquor stores, casinos and strip clubs, the House-Senate conference committee has added language that will trouble EBT program managers and state agencies for some time to come - at least until the dust settles and we can figure out what it all means.

The bill would ensure recipients would have access to funds "...with minimal fees or charges, including an opportunity to access assistance with no fee or charges. The conference agreement also defines electronic benefits transactions (i.e. EBT) as "...the use of a credit or debit card service, automated teller machine, point-of-sale terminal or access to an online system for the withdrawal of funds or the processing of a payment for merchandise or service." Whew.

This raises a lot of questions. Where do I start? First, the bill would require access to funds with minimal fees or charges. That's noble, but who gets to define "minimal?" What's minimal to you could be maximum to me.

Those receiving assistance would have to be able to "access" their funds at no cost. But that is done today through the use of surcharge-free networks or point-of-sale cash-back transactions. So why include it here?

And what about direct deposit? If a TANF recipient has a bank account, no matter how small, and lives in a state that does direct deposit for TANF, does that count as free access?

Perhaps most troubling of all is the definition of EBT. How does the committee define "debit" card? The traditional industry definition of debit card is an electronic card that is linked to a traditional bank account (a so-called DDA account). That's different that a "prepaid" card where the funds are not deposited in a DDA account, but are held by the card issuer. This would cover, for example, state-issued prepaid cards for unemployment or child support payments. But that's not what the bill says. It says debit cards used for electronic benefits transfers are covered. So if a recipient has his TANF funds directly deposited into his DDA account and then accesses the with a debit card associated with that account, it would appear that he can't be charged for any transaction involving those federal funds.

But how would a state even know about those transactions, since it didn't issue the card? And suppose states try to enforce the ban on accessing TANF funds in a liquor store, casino or strip club by penalizing the cardholders? And suppose one such cardholder is penalized for accessing cash from a liquor ATM, presumably to buy liquor. And suppose another TANF recipient has the money directly deposited into his account and then uses his bank card to withdraw the cash to by liquor? Has the EBT cardholder been denied equal protection, since other program participants can get away with misuse of TANF payments but he or she can't?

States would have two years to comply with the blocking requirement and would be required to report
 their results to the Secretary of the Department of Health and Human Services. States that fail to adequately block transactions as required by the bill could see their assistance grant shaved by up to five percent.

They say that the drafting of legislation is a lot like making sausage -  you don't want to know what goes into it. This bill is more like scrapple. You don't even what to picture what's inside of it.