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May 17, 2023

Fraudsters Prey on Factors Influencing Health Outcomes

This article addresses various forms of fraud and how criminals’ prey on compromised citizens.  Contributions to this article are made from the American Institute of Healthcare Compliance Volunteer Education Committee’s interview of a law enforcement official.   

There are many factors which can influence our health, and in turn, there are just as many schemes which are actually considered health care fraud.

Social determinants of health (SDoH) are the nonmedical factors that influence health outcomes.  They are the conditions in which people are born, grow, work, live, and age, and the wider set of forces and systems shaping the conditions of daily life. While healthcare providers focus on how to capture SDoH data on patients to improve health outcomes, a counter force may be working in the background which hurts struggling families as they fall victim of fraud schemes.

SNAP Fraud

Food assistance is generally referred to as SNAP or food stamps. States may have their own names.  For example, in California it is known by Cal Fresh.  SNAP stands for Supplemental Nutrition Assistance Program and is the nation’s most important anti-hunger program.  The USDA administers SNAP food assistance through state food stamp programs.  There are directives and policies at state, federal and county levels that encourage healthy eating and lifestyles.  This can help most people to live or become healthy and contribute to positive mental health outcomes.

This government program provides food to low-wage working families, low-income seniors, people with disabilities, and other individuals with low incomes based on a sliding scale.  In 2021, SNAP helped an average of more than 41 million low-income people in the United States afford a nutritionally adequate diet each month.

How this Assistance Works

The Government (taxpayer) loads a debit card and the welfare recipient withdraws the money.  It is intended to provide the basics of food, shelter and clothing.  Policymakers at every level offer incentive and issue public service announcements for shoppers to “shop smart.”

The incentives take many forms. The foods that can be incentivized are fruits, vegetables, dairy and whole grains.  This takes place at small to national retailers, farmers markets and online SNAP retailers.  “Double Up Food Bucks” allows the shopper to buy twice the number of fruits and vegetables with each SNAP dollar.  SNAP participants can even buy seeds and edible plants to grow their own food. This can be a rewarding and empowering experience.

Other incentives include an Amazon membership discount, city bike-share programs, museum and zoo access, discounted YMCA membership and discounted internet access with device options.  Retailers can participate with online purchasing and delivery.  There is a special program that allows elderly, homeless and disabled SNAP recipients to purchase food at SNAP authorized restaurants.  On their own, retailers can offer other discounts and coupons for future purchases.

The debit card system (EBT), that serves welfare receipts, does not have a chip.   All you need is the account and pin number.  Newer EBT account cards may have the CVV code but it’s not required to complete a transaction.  Both of these features can offer verification that the account owner is the person using the card.

EBT Fraud – “It’s a Thing” with Criminal Gangs

Organized Eastern European criminal gangs, largely of Romanian origin, are responsible for ballooning EBT losses.  For just the month of May, 2023, California is reporting 8 million dollars.  The groups are intricate, diversified and organized. Google “EBT account skimming, device, welfare.” It’s a thing.

Gangs Breach UIB Accounts Too

The same groups are or were breaching Unemployment Insurance Benefits (UIB) accounts.  The crooks change their methods and technology frequently.  Compared to what these gangs are doing right now, much of the information easily found on the internet is old.

Most of the hardware, components and software are inexpensive and easily available from Amazon and eBay.  Currently, there are two notable methods.

  • One, the thieves are removing and replacing the keypad on self-checkout areas and sometimes regular register lanes. This type of skimmer captures the account and pin number.  They Bluetooth the data off the device from the parking lot.
  • The second method, at outside bank ATM’s, the crooks insert a thin metal or carbon fiber device into the card slot which reads and records the account number.  They also place a small piece of trim containing a camera and SD card above the terminal to capture the PIN.
    • The skimmer captures the account number and the camera shows the customer entering the PIN.
    • The crook inserts a known card into the ATM slot to show a starting point so they can match up the accounts to the PIN’s. To use the data, they have to retrieve the skimmer and camera.
    • The crooks then take the info and write it onto the magnetic strip of any extra card laying around, old gift cards, hotel room cards, and mailed card offers, etc.  Then they visit an outside ATM with stacks of cards and drain the accounts.

No fresh fruit and vegetables for you, my friend

Food and shelter are growing concerns for even the middle class.  The poor are taking the biggest hit.  Only some of the stolen EBT funds are replaced making both the taxpayer and the welfare recipient victims.

How about the Welfare recipient?  At the county level, they are encouraged to change their PIN monthly which means calling into a phone tree or visiting the local welfare office. Recipients are encouraged to check their account regularly. Most recipients’ benefits are siphoned off by the crooks during the 1st three days of the month. Don’t worry, it's Federal (taxpayer) money.

To report the loss, recipients must fill out form EBT 2259 and face a bit of scrutiny by their case manager.  One would expect some recipients to take advantage of the situation and some do.  Such as, having a friend spend the money or spend it anonymously on the internet and then claim fraud.  Case managers have to make a decision.  If they can’t figure it out, they may defer to county special investigations units (SIU’s).

According to the USDA, replacement benefits cannot exceed the actual amount stolen or the household’s benefit allotment amount for the two months immediately preceding the theft, whichever is lesser.

The USDA goes on to stipulate this can only happen twice per year.

Oh, guess what? The crooks are known to replace skimmers at the same locations the 1st, 2nd and 3rd of the month, EVERY month!


Criminals seem to stay one step ahead, creating more poverty in a situation which is already in crisis.

Rumors abound at adding a chip to the cards in 2024.  While it’s hard to spin this in the news media, especially considering political ambitions, welfare recipients are at a loss at the dinner table.  Millions of those in need are experiencing the stress of making due or going without.

Learn more about SDoH, and how capture and report for reimbursement purposes. The American Institute of Healthcare Compliance (AIHC) is a non-profit health care training organization. Want to volunteer?  Join us – for volunteer opportunities and member discounts.

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