There are reports today of a 2 hour or so glitch in the Louisiana EBT (food stamp) program on Saturday night that allowed many shoppers to go on a spending spree. Apparently, the cards weren’t registering a balance but were authorizing transactions at Wal-Mart, which means it was an all-you-can-grab free-for-all for those shoppers who managed to figure out what was happening with the cards.
Clearly, this is a situation that cannot go unfixed. We’re talking about outright theft of taxpayer funds by the individuals who took advantage of a technical glitch and a retailer being complicit in allowing the theft to continue. I can imagine 4 possible results of this situation: 1) the shoppers are stuck with the bill as an advance on future funds, 2) Wal-Mart and the card processor (Xerox, I believe) foot the bill, 3) Louisiana taxpayers foot the bill, or 4) some combination of all of the above.
The first response, while I’m sure will have support from some, doesn’t seem all that practical to me. I used to work for Chase bank, and if your account was mistakenly credited with someone else’s deposit but you decided to spend the funds thinking Christmas came early (yes, this happened), then once the bank corrected the mistake and removed the funds from your account, you could be left actually owing the bank money if you went ahead and spent it. In my opinion, this is the reasonable way to deal with adults, but even if you consider that it is probably the most direct and equitable way to recoup these funds by considering it as an advance of future payment, there are potential unintended innocent victims that could be harmed (i.e. children). As a result, I don’t see the state sticking them with the full bill.
The second response; sticking retailers who knew what was happening and accepted the cards anyway and the company responsible for the glitch with the bill seems somewhat fair, but ignores the fact that the customers were just as guilty for spending money they knew they didn’t have. So I can’t see the customers getting off scot-free either.
The third response; Louisiana taxpayers foot the bill and everyone acts like nothing happened, seems like the least likely result to me. Politically and equitably I can’t even come up with a possible rationale for this being a possible result.
Which leaves us with a combination of the customers, retailers, and the processing company paying for this in some combination. Now, I’m assuming that the card processor has a way of determining who spent what during this fiasco and could conceivably pursue solution #1. Also, I don’t exactly think it’s fair for the processor to be stuck with liability on this. So, I would come up with some way to make the customers pay for as much as possible without inflicting too much harm in future months (such as by providing enough notice for the effected people to plan ahead), with Wal-Mart paying the difference.
Interestingly though, I tried to get a full statistical breakdown of EBT recipients in DeSoto Parish, where the Mansfield Wal-Mart is located, and all I could find is this, which says about 10% of DeSoto Parish receives food stamps at an average of $126/person per month. If true, the reports of some shoppers “purchasing” over $700 of food, makes their actions look even worse. (The federal government-run SNAP website is down due to the “government shutdown” at the time I write this.) In any event, the lesson should be this: DON’T SPEND MONEY THAT ISN’T YOURS!
*UPDATE* A spokesman for the Louisiana Department of Children and Family services says that state taxpayers have nothing to worry about. The retailers failed to follow a procedure with Xerox, the EBT card processor, so either the retailers will have to eat the cost or pursue potential legal remedies against the shoppers.
*UPDATE 2/24/14* The state is apparently going after 500 of the most egregious overspenders and disqualifying them from benefits.