7 U.S.C. § 2016a: EBT benefit fraud prevention

Summary

Requires the Secretary to give states ongoing guidance and make rules to stop people from stealing electronic food benefits (for example by card skimming or card cloning). The guidance must say what security steps work, match industry practices for card fraud, and be reasonable for states to pay for and use. The Secretary must write rules that force states to use those security steps, and by December 1, 2023 must issue rules (including an interim rule) making states set up benefit-replacement procedures. The Secretary must work with HHS, the Attorney General, states, stores, and EBT contractors to find how thefts happen, where they happen, how stolen benefits are used, what store equipment or other fixes can help, and how states should report theft data. By December 1, 2024 the Secretary must send Congress a report on how often and where benefits are stolen, the steps taken, the industry standards used, a comparison of state plans, and recommendations to detect and prevent theft. The Secretary must use federal funds to require states to replace benefits that a state finds were stolen by skimming, cloning, or similar fraud, if the state submits an approved plan within 60 days after December 29, 2022. Plans must set rules for claims, proof, recordkeeping, data reports, notice of hearing rights, and use of prevention tools. Replacements cannot be more than the amount stolen or more than two months of the household’s monthly allotment, whichever is less. A household can get replacements no more than twice per Federal fiscal year from the same state. Replacements only cover thefts from October 1, 2022 through December 20, 2024. Of unused SNAP funds from the American Rescue Plan Act of 2021, $8,000,000 is taken back. The Comptroller General must report on EBT security risks not later than 1 year after September 26, 2024. Definitions: allotment (monthly benefit amount); benefit (SNAP payment); household (people eligible together); retail food store (stores that take SNAP); State agency (state office that runs SNAP).

Title 7, §2016a

Agriculture, Source: USLM XML via OLRC

(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

(1)In 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.

(2)Contents

The report under paragraph (1) shall include an assessment of— (A)

(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.

Notes & Related Subsidiaries

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.”

§2016a Ebt Benefit Fraud Prevention