Federal funding cuts slow states' shift to chip-enabled EBT cards

Most states do not replace stolen SNAP benefits

Federal funding cuts that took effect this month are making it harder for states to upgrade the payment cards used to distribute SNAP food assistance, according to the Government Accountability Office. The reductions compound a vulnerability that cybersecurity experts say has persisted for years: most states still issue benefits on magnetic-stripe EBT cards, while the rest of the U.S. payments system has moved to chip-based security.

The scale of the loss is large. The USDA’s Office of Inspector General projected that, over the past two years alone, $233 million may have been lost to food assistance theft — largely driven by skimming, the practice of extracting card information from compromised payment terminals. In most states, stolen benefits are not replaced, leaving recipients to absorb the loss.

The mechanics of the fraud are well understood. Scott Schober, chief executive of Berkeley Varitronics Systems and an inventor of several skimming detectors, said criminals typically place a skimming device on a payment terminal while a cashier is distracted, capturing card data that is later used to clone cards. “So it’s a very quick ecosystem from the point of stealing the card to drain,” Schober said. “Sometimes it’s within hours. It’s that well-orchestrated.” With SNAP benefits, criminals typically mass-purchase items that are easy to resell, such as baby formula.

The U.S. Secret Service has tied the operations to transnational criminal groups. Michael Peck, an assistant special agent in charge of the Secret Service’s Criminal Investigative Division who oversees the agency’s skimming investigations, said the rings time their theft to the start of each month when benefits arrive. “These transnational organized crime groups are coming into the U.S. specifically to target our benefits system,” Peck said. “They know they’re stealing from the poor.” Skimming first emerged more than two decades ago, and most U.S. banks have since upgraded their debit and credit cards with microchips. SNAP has lagged.

Jayeleauna Lewis, a 20-year-old single mother from Indiana, learned her benefits were gone on Sept. 13, minutes after they were loaded onto her account. “I was heartbroken because that’s how I feed my daughter,” she said. The $486 she was owed that month was spent in eight stores across New York, New Jersey and Pennsylvania between 12:11 a.m. and 12:13 a.m. — stores Lewis said she has never visited. Her physical EBT card remained in her wallet.

Recipients who lose their benefits often face immediate hardship. Propel, an app that helps users check their SNAP balance, surveyed individuals who said they were victims of SNAP theft. A majority of respondents said they skipped or ate fewer meals as a result, nearly half said they borrowed money or went into debt, and more than a third said they struggled to pay their bills or rent. “That’s the real kind of human cost of SNAP benefits being stolen,” said Jimmy Chen, Propel’s chief executive.

SNAP recipients have fewer legal protections than other cardholders. Debit and credit card holders are reimbursed for unauthorized transactions under the Electronic Funds Transfer Act. In 1996, Congress voted to exclude SNAP recipients from those same protections because of concerns about cost, according to a 2025 GAO report. The federal government temporarily replaced more than $320 million in stolen benefits for nearly 670,000 households between October 2022 and December 2024, giving some sense of the scale. That program has since ended.

Christopher Branch, a part-time Walmart employee from Illinois, said he has experienced both credit card and food-stamp theft. His bank refunded him for the money he lost; the food benefits he used to feed himself and his two children were never recovered. During the month without his food assistance, Branch said, he took on side jobs fixing cars to afford groceries. “I was very upset and disappointed,” he said. “I couldn’t get no type of help.” Mary Barclay, a Massachusetts recipient whose benefits were stolen, said her caseworker faulted her for not locking her EBT card and that police met her story with skepticism. “They made me feel as if I had something to do with it,” she said.

California became the first state to issue chip-enabled EBT cards in early 2025, and state officials reported a consistent and rapid decline in SNAP theft over the following months. Fewer than a third of states have upgraded or plan to upgrade, according to the USDA. States have addressed skimming in other ways, but most approaches put the burden on recipients — requiring them to change PINs monthly or lock their cards until they are ready to make a purchase. “It can be difficult for some people to do that if you don’t have a cellphone, for example, that has the app that allows you to do the locking,” said Kathryn Larin, a director at the GAO.

The shift to chip cards is expensive. A GAO report found chip-enabled cards cost about 10 times more to produce than magnetic-stripe cards, and the initial transition can cost states millions of dollars. The USDA supports the shift but provides limited funding; last year the department awarded seven states a combined $5 million to address fraud. The bigger barrier arrived this month. The One Big Beautiful Bill Act cut federal funding for state SNAP administrative costs by half. The law also requires state agencies to reduce their payment error rates or face financial penalties.

At least five states have said they plan to delay issuing chip cards or related investments as a result of the federal funding changes, according to a survey by the American Public Human Services Association and the Urban Institute. “The likelihood of states being able to switch to chip-tap technology without federal support is going to be even more less likely,” said Gina Plata-Nino, the SNAP director for the Food Research & Action Center. “It will increase the budgetary pressure and will make it more difficult for states to allocate funds to benefit card theft prevention,” Larin added.

Peck, the Secret Service agent, said law enforcement operations alone cannot solve the problem. “The issue we run into is the fact that the groups that conduct this fraud aren’t afraid to go right back to a store and install again,” he said. Congress has considered mandating chip cards nationwide. The Senate version of the Farm Bill includes a provision to move toward chips; the House version does not. The outcome is unclear, in part because Congress is at an impasse over hundreds of millions of dollars in potential penalties against states with high payment error rates.

The USDA pushed back on the idea that the funding changes would worsen skimming. “Skimming has been plaguing recipients for years, and States sat idly, allowing benefits to be stolen from those who need them. SNAP administrative funding changes should not make it harder to fight skimming, as it simply holds these complaining lawmakers accountable,” the department told NPR. Sen. Ron Wyden (D-OR), who has pushed for more secure EBT cards since the Biden administration, framed the issue differently. “The conversation about boosting cybersecurity standards is hard to make as long as Republicans refuse to restore the food assistance,” Wyden said. “What I’m committed to doing is getting both of these over the finish line.”

Back in Indiana, Lewis’s stolen benefits have had a ripple effect on her family. Her mother, Johna Hammontree, said she typically lives paycheck to paycheck but has been stretching every dollar to ensure her daughter and granddaughter do not go hungry. “It’s really, really rough for me already,” Hammontree said. “But I will take from my rent money, my bill money, my grocery money … Whatever I need to pull from financially to make sure that she’s okay.”