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.

Walmart Planning EBT Meeting

Walmart is planning what it calls a "summit" for the WIC and SNAP programs to take place this summer. The date of the event is July 30 at the retailer's corporate office in Bentonville, AR.

Conference organizers for Walmart have distributed notices about the event. Distribution was limited to state WIC and SNAP directors, according to sources. Including in the notice is a  link to an online survey. The purpose of the online survey is to solicit programming ideas from the invitees.

The question arises whether programming and program participation is open to all EBT professionals or if this is intended solely for state and federal EBT staff and is a way for Walmart to get state program managers in a room for eight hours without having to share their attention with financial institutions, processors, manufacturers, consultants and other critical thought leaders in the EBT community.

NCSL Opposes ATM Blocking Bill

As Congressional efforts to limit the places where TANF recipients can access their benefits via ATMs, the National Conference of State Legislatures has gone on record as opposing the most recent bill, H.R. 3567 the Welfare Integrity Now for Children and Families Act. NCSL believes that the decision to block is better left to the states, and would be more consistent with Congress' 1996 intent when it replaced the AFDC program with TANF.

Below is a text of NCSL's letter to House of Representative leaders Boehner and Pelosi.

January 30, 2012

The Honorable John Boehner                          The Honorable Nancy Pelosi
Speaker of the House                                      Minority Leader
1011 Longworth HOB                                      235 Cannon HOB
Washington, DC 20515                                   Washington, DC 20515

Dear Speaker Boehner and Minority Leader Pelosi:

On behalf of the National Conference of State Legislatures (NCSL), we write in opposition to H.R. 3567, the “Welfare Integrity for Children and Families Act of 2011,” which is scheduled for a vote on the Floor under Suspension of the Rules on Wednesday, February 1. States share your concern about the inappropriate use of Temporary Assistance for Needy Families (TANF) benefits; however, NCSL strongly believes that these decisions are appropriately made at the state level. 

When Welfare Reform was enacted in 1996 (P.L.104-193), state and federal policymakers agreed to forgo the open-ended entitlement of AFDC for the flexibility afforded in the fixed TANF block grant. In this agreement, policy decision making authority was left up to the states including state legislatures. Mandating states to limit Electronic Benefit Transfer (EBT) transactions preempts state authority over the TANF block grant and undermines the strong state-federal partnership undertaken in 1996. Additionally, NCSL is concerned about the financial burden this mandate would impose on states, many of whose fiscal situation is still perilous. States have existing contracts with EBT vendors that might need to be changed at significant cost to the state if this bill becomes law.

States are addressing the issues raised in H.R.3567. To date, California and Washington have limited the use of EBT cards and addressed the complex implementation process of limiting EBT card usage. Many additional states are looking at similar EBT limitations and other ways to combat fraud and abuse in their current sessions. 

If you have any questions regarding what states are doing to address the concerns of H.R.3567 or to discuss the bill, please do not hesitate to contact Sheri Steisel (sheri.steisel@ncsl.org) or Emily Wengrovius(emily.wengrovius@ncsl.org) or by calling (202)624-5400.

Sincerely,

 
The Honorable Tom Hansen                                               The Honorable Barbara W. Ballard
South Dakota Senate                                                          Kansas House of Representatives
Chair NCSL Human Services & Welfare Committee Chair   NCSL Human Services & Welfare Committee

More on ATM Blocking

On February 1 the House of Representatives passed H.R. 3567, the Welfare Integrity Now for Children and Families Act. The vote was 395─27. This legislation would requires states, two years after enactment, to establish policies and procedures blocking access to Temporary Assistance for Needy Families (TANF) funds at liquor stores, casinos and establishments providing “adult entertainment.” This would extend to accessing funds at ATMs located in these restricted places.

The House’s action marks the third time in the last few months it has voted on a measure such as this. The language was included in H.R. 3659 which reauthorized the TANF for one year. The House unanimously passed H.R. 3659 in December. It is currently pending in the Senate. The House initially included the language in the Middle Class Tax Relief & Job Creation Act (H.R. 3630) that it passed in December as well. The provision was dropped when the House accepted the Senate’s two-month payroll tax reduction measure.

Rep. Charles Boustany (R-LA), H.R. 3567’s author, claimed on the House Floor that blocking access to TANF cards at liquor store, casino and strip club ATMs is easily done. Rep. Lloyd Doggett (D-TX) produced a letter from the National Conference of State Legislatures (NCSL) in opposition to H.R. 3567. NCSL pointed to California and Washington as examples of experiencing “complex implementation” issues when limiting electronic benefit cards.

We should know in the coming weeks whether the House and Senate will agree to include the “strip club loophole” provision in the payroll tax reduction compromise. Since Senate Finance Committee Chairman Max Baucus (D-MT) and its Ranking Member Sen. Orrin Hatch (R-UT) introduced similar legislation last year, odds may favor its inclusion in the conference report. Meantime, several states including Florida and Massachusetts are considering similar measures.

-Posted by Dennis-

The Fed Is Looking for a Few Good People

The Payments Card Center (PPC) of the Federal Reserve Bank of Philadelphia is looking for Industry Specialists. Candidates must be able to research, analyze, write, and present. Since the Philly Fed is part of the larger Federal Reserve System industry specialists are also called on from time to time to serve on special project teams made up of colleagues from across the vast System.

The PCC was launched ten years ago to study developments in consumer credit and payments. The Council has worked with the PCC on occasion, even co-hosting a conference on EBT in 2004.

Interested? click over to the Philly Fed career site and follow the instructions for applying.

Welcome to The Wall!

Welcome to The Wall! I'd like to say that The Wall is the official "blog" of the eGovernment Payments Council, but, truth be told, it's not a blog at all. The Wall is the place on the Internet where EBT professionals meet to exchange ideas, share information, react to events within the electronic government payments community and proactively talk about upcoming events.


The Wall is a place where you'll find the latest information on electronic government payments--from electronic benefits transfer (EBT) to government-issued prepaid debit card programs to WIC EBT and beyond.


The Wall is a lot like those bulletin boards you used to see in the vestibules of small-town grocery stores. Only instead of a slightly used baby carriage for sale or an upcoming church fair, here you'll see alerts about proposed operating rules about to be published, job listings, conferences, and analysis of issues facing government electronic payment professionals. Just don't look for babysitting services!


A word of caution: When visiting The Wall you may see something you disagree with. It might be a proposed rule that we are alerting the community to. It might be analysis of a pending regulation. It might be a promotion for our annual conference. If something ticks you off, don't go away angry. Scroll down to the bottom of that particular post. You'll see a comment area. Comment. Tell the rest of us why you disagree. Think of it as informed graffiti.


Even better,  add to the discussion, if you  have information to share. You can also raise issues on The Wall. Get a comment thread  on a particular topic. It's up to you.


So this is The Wall. A market place of ideas for electronic payments professionals like you. It will become what you want it to become. Enjoy!