I-TEAM: EBT cards traced to ATM’s at liquor stores, strip clubs

I-Team

SPRINGFIELD, Mass. (WWLP) – More than 48,000 Massachusetts households rely on tax dollars to pay for basic necessities. 

Welfare recipients are supposed to spend that money on items like groceries and rent, but the 22News I-Team traced EBT cash withdrawals to some questionable locations.

We went through thousands of pages of EBT ATM withdrawals from a 12-month period, and what we uncovered was shocking. We found thousands of dollars being taken out at strip clubs, tattoo parlors, and liquor stores in western Massachusetts.

EBT ATM WITHDRAWALS: https://bit.ly/2J3HYek

State Senator Don Humason has been an advocate for ending the state’s EBT cash system. “The loophole that still exists in Massachusetts is that as long as you can use your EBT card at an ATM, it can be used for money. Once that money is taken out, it can be spent on anything.”

(Should we have ATM’s at locations like strip clubs and liquor stores that can accept EBT cards?)

“No, especially in cities where there’s a bank across the street, or an ATM right down the corner,” Senator Humason said.

Welfare recipients can’t buy tobacco or marijuana products with their EBT card, but the I-Team found more than $11,000 was taken out of ATM’s at smoke shops and hookah bars.

EBT cards cannot be used to buy alcohol, but EBT recipients withdrew more than $38,000 at places that identify as package or liquor stores.

The I-Team showed our findings to State Auditor Suzanne Bump. “Sometimes that’s simply the closest  ATM in proximity, but that being said, we do know that some of this is slipping through.”

Auditor Bump told the I-Team, the Department of Transitional Assistance, or DTA, which oversees the state’s welfare system, has blocked thousands of ATM’s over the past few years at places like bars and liquor stores. “I think there’s overall less opportunity for abuse, but it still does continue,” she said.

The I-Team wanted to know whether the EBT ATM withdrawals we found at liquor stores and strip clubs really were the only ATM’s in the area, so we took our investigation on the road.

Our first stop was a headshop on Wilbraham Road in Springfield, where welfare recipients took out $460 in the month of December. The I-Team discovered, this ATM was less than .2-miles away from three banks.

We then went to a tattoo parlor on Northampton Street in Holyoke, where $200 was withdrawn from an EBT card. The next closest ATM was at a bank, located less than 1-minute away.

DTA declined our request for an interview but told us they blocked 4,000 ATM locations at prohibited places, such as liquor stores and bars in 2018.

They also said they’ve created a special unit, called the Program Integrity Division, that’s dedicated to finding welfare fraud and abuse.

Auditor Bump told the I-Team after her office uncovers welfare fraud, she makes recommendations to the legislature to try and crack down it, but eliminating it completely may be impossible. “Human nature being what it is and human ingenuity being what it is… our goal is to minimize the amount of cheating in the public assistance program.”

Many of the liquor stores and strip clubs the I-Team traced the EBT withdrawals to, are the same locations we told the state about in 2015. 

If someone is caught misusing their EBT card, they must pay DTA back for the amount of money spent on items or services. The second time they’re caught, they must pay DTA back and lose their cash assistance for two months.

Statement from the Department of Transitional Assistance:

“Nearly all individuals receiving public assistance use benefits as intended. The Department of Transitional Assistance (DTA) continuously strengthens its program integrity efforts and created a dedicated unit to identify fraud and abuse to ensure benefits are reserved for those who truly need them. DTA uses enhanced data analytics to proactively monitor Electronic Benefits Transfer (EBT) transactions and was the second state welfare agency in the country to launch an aggressive program to stop fraud before it occurs by blocking locations where cash assistance use is prohibited.”


CANNOT USE CASH BENEFITS TO PAY FOR:

⦁    Alcoholic beverages
⦁    Court-ordered fees, fines, bail or bail bonds
⦁    Firearms and ammunition
⦁    Gambling
⦁    Lottery tickets
⦁    Jewelry
⦁    Adult-oriented entertainment material or performances
⦁    Tattoos or body piercings 
⦁    Tobacco products 
⦁    TVs, stereos, video games, or consoles at rent-to-own stores
⦁    Vacation services
⦁    Recreational marijuana

CAN’T USE CASH BENEFITS TO SHOP AT:

⦁    Adult bookstores
⦁    Ammunition or firearm dealers 
⦁    Casinos
⦁    Cruise ships 
⦁    Jewelry stores 
⦁    Liquor stores 
⦁    Nail shops 
⦁    Tattoo parlors 
⦁    Agencies that transfer money to foreign countries
⦁    Recreational marijuana stores
 

Additional Information on DTA’s Program Integrity Division:

  • Monitor economic assistance transaction data every day, to identify any attempted purchases at prohibited locations. For example, transactions are searched daily for variations of merchant names similar to liquor, casino, tattoo, etc.
  • Preemptive blocking of certain locations based on specific merchant codes. For example,  codes for “Package Stores – Beer, Wine, and Liquor,” “Betting (including Lottery Tickets, Casino Gaming Chips, Off – Track Betting and Wagers)” and others are blocked.
  • DTA blocks ATM withdrawals at prohibited locations by monitoring attempted withdrawals and blocking prohibited locations. In order to block a location, DTA must first have an attempt at the location in order to get the necessary information because of certain terminal information necessary. If an ATM machine has been replaced, it is possible that a withdrawal may occur before it is blocked.
  • In some instances, a member of DTA’s Program Integrity Division will be sent to a particular location to attain the necessary information to block the terminal by swiping a test card.
  • DTA does not receive information about what items people purchase, but instead on locations items are purchased at. Blocked transactions are prevented by blocked locations.

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