To Tackle Fraud, States Must Strengthen EBT Card Integrity
Key Findings
- As food stamp spending has ballooned, so has waste, fraud, and abuse.
- Limited security features and weak reporting requirements leave EBT cards vulnerable to fraud.
- Audits have found food stamp enrollees collecting benefits in multiple states at once or for years after moving out of state.
Overview
The food stamp program allows for food purchases using an electronic benefits transfer (EBT) card, which functions like a debit card. These magnetic-stripe EBT cards are easily skimmed, cloned, and stolen, and once benefits are gone, they are difficult to recover.1 EBT cards have lower security than standard debit cards and can be more easily resold or misused. Most EBT cards lack basic security features like photos, freeze options, and microchips, which are standard on debit and credit cards.
Suspicious behavior, like excessive out-of-state use, is not usually flagged. Food stamp applicants must apply for benefits in their home state. But when enrollees move to a new state, they generally must cancel their existing benefits before reapplying in their new state of residence. Excessive or prolonged use of food stamps outside one’s home state could indicate fraud. Moreover, weak reporting requirements make it difficult for states to catch enrollees who move without reporting it.
Food stamp spending has exploded over the last two decades, and as enrollment and spending have increased, so have improper payments and fraud. Curbing fraud is necessary to reduce the program’s growing costs.
States have the tools to close these gaps and protect food stamp resources for the truly needy. States must strengthen EBT card security by limiting replacement cards, adding photos to EBT cards, enabling a freeze or lock feature, and restricting out-of-state and online transactions by default.
As food stamp spending has ballooned, so has waste, fraud, and abuse.
Food stamp spending has skyrocketed in recent years. In 2000, the program’s annual cost to federal taxpayers was just $17 billion.2 By 2025, the cost exceeded $100 billion, a nearly sixfold increase.3 Over the same period, food stamp enrollment more than doubled, from 17 million to 42 million.4
As spending has surged, so has fraud on the American taxpayer. States’ official food stamp error rate, known as the National Payment Error Rate, measures improper issuance of benefits, including enrollee errors and state agency errors.5 Improper payments are driven by states not fully verifying enrollees’ eligibility for food stamps.6 In fiscal year 2025, more than $10 billion in food stamp payments were improper.7 Across all federal programs, more than $500 billion in federal taxpayer dollars is lost to fraud every year.8
Curbing waste, fraud, and abuse is essential to reining in food stamp costs and protecting the truly needy. With the signing of the One Big Beautiful Bill Act in July 2025, states are now required to manage their excessive payment error rates or pay for a portion of the food stamp benefit costs.9 Using 2025 data, 41 states had error rates of six percent or higher, the threshold that triggers a penalty.10 Even so, reported food stamp error rates are dramatically understated.11 Without action, states will be on the hook for millions—or even billions for a large state like California—in food stamp benefit costs.12 States must curb waste, fraud, and abuse to reduce costs and protect program resources for the most vulnerable.
Limited security features and weak reporting requirements leave EBT cards vulnerable to fraud.
EBT cards are uniquely vulnerable to fraud.13 Without strengthened security measures, projected losses from fraudulent activities such as skimming and cloning could exceed $233 million over the next two fiscal years.14 Households that request excessive replacement cards may be trafficking them.15 An analysis of more than 10,000 high-replacement card households found that 73 percent were conducting suspicious activities.16 Federal rules already allow states to flag a household that requests four or more replacement cards within a year.17 States must limit replacement cards to protect against fraud.
Most EBT cards do not display a photo of the recipient. Federal law gives states the option to require one, though few have taken this step to strengthen program integrity.18 Massachusetts requires photo identification on the front of each EBT card, though many individuals are exempt from the requirement.19 Missouri requires TANF EBT cards to include a photo of the recipient.20 When states required identity verification for unemployment insurance, payouts to suspicious cards declined by nearly 30 percent.21 Photos on EBT cards apply the same principle at the point of sale, ensuring benefits are spent by the rightful recipient rather than by fraudsters using stolen or trafficked cards. States should require photos on EBT cards to deter fraud and strengthen program integrity.
Just as with a standard debit card, allowing recipients to lock their EBT card can help to prevent unauthorized transactions. The high volume of skimming fraud is driving many states to adopt this reform. For example, Georgia, Pennsylvania, Nevada, and New York offer mobile applications that let recipients lock their cards between purchases and unlock them only when they intend to make a purchase.22-25 A locked card cannot be used by a thief who has skimmed or cloned it.
Another common sign of potential fraud in the food stamp program is prolonged or excessive out-of-state EBT use.26 Keeping benefits active in a former state while applying for benefits in a new state is another form of fraud known as dual participation.27
States already have transaction data from EBT cards, allowing them to identify when enrollees are using EBT cards exclusively out of state for months on end. However, states rarely use this information to identify changes in enrollees’ circumstances. One reporting methodology, known as simplified reporting, is making matters even worse. Simplified reporting was not created until 2000, but it is now used by the vast majority of states.28-29 Simplified reporting allows food stamp enrollees to avoid reporting certain changes that affect their eligibility, making it difficult for welfare agencies to keep up. Out-of-state moves, as a result, are often not reported by enrollees and not recorded by states. Simplified reporting is essentially the honor system.
Change reporting, on the other hand, requires individuals to report certain changes in circumstances, including moves, within 10 days.30 Currently, only Mississippi uses change reporting. More than 30 states use simplified reporting, and 18 use both simplified and change reporting.31 Requiring enrollees to report changes in circumstances helps to ensure that ineligible enrollees do not receive benefits at the expense of the truly needy. Household circumstances change often, affecting eligibility. States cannot afford to maintain such high error rates and must strengthen their reporting requirements.
Audits have found food stamp enrollees collecting benefits in multiple states at once or for years after moving out of state.
Food stamp enrollees frequently fail to report changes, like moving out of state, that affect their eligibility. A 2026 Kansas audit found that the state’s welfare agency distributed up to $1.2 million in food stamp benefits to enrollees who may not have lived in Kansas.32 In one case, an individual received food stamps from Kansas for 21 months after likely moving to another state.33 The welfare agency told auditors that Kansas’s simplified reporting requirements prevented them from quickly identifying when an enrollee moves out of state.34
Massachusetts auditors found $4.58 million in out-of-state transactions that warranted investigation.35 An audit in Washington state found that enrollees with high out-of-state EBT use failed to complete their standard reviews at twice the rate of overall food stamp enrollees, and a state official noted that such individuals are likely ineligible.36 The audit showed that filtering out-of-state purchases to identify non-residents could save the state hundreds of thousands of dollars each year.37
An Ohio audit found significant out-of-state activity, even after excluding border states, prompting auditors to recommend additional verification.38 In Utah, more than 600 food stamp enrollees made purchases exclusively outside the state for at least six months.39 Some of these individuals claimed benefits in other states simultaneously.40
A Missouri audit revealed 39 food stamp enrollees who made purchases exclusively outside the state for 700 or more consecutive days.41 The same audit found that one enrollee spent $13,000 exclusively outside Missouri for two years, generating an alert.42 But the case was not closed until months later, when the investigation revealed that the enrollee was in fact living outside Missouri.43
At the federal level, Government Accountability Office (GAO) audits show more of the same.44 GAO recommended that the U.S. Department of Agriculture more comprehensively assess states’ theft prevention measures.45 Some states are rolling out enhancements to automatically block out-of-state or online transactions, prompting the cardholder to verify their identity and unlock the card before making a purchase out of state.46-48
Excessive out-of-state use points to fraud. Restricting out-of-state and online transactions by default protects program funding for those with a true need.
The Bottom Line:
States should strengthen EBT card integrity by limiting replacement cards, adding photos to cards, enabling a freeze or lock feature, and restricting out-of-state and online transactions by default.
Food stamp spending has grown out of control, and so has waste, fraud, and abuse. The One Big Beautiful Bill Act now holds states financially accountable for their excessive payment error rates in food stamps.
EBT cards are ripe for abuse, but states have the tools to strengthen their integrity and protect them against theft and trafficking. To curb fraud and protect the truly needy, states should limit replacement cards, add photos to cards, enable a freeze or lock feature for EBT cards, and restrict out-of-state and online transactions by default.
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