Newsom touts gains against EBT theft as Trump presses blue states on benefits fraud

Newsom credited the reduction to the state's rollout of anti-fraud technology such as more secure electronic benefit (EBT) cards with electronic chips.

"In California, we're leading the way by turning innovation into action by stopping theft and ensuring benefits reach those who truly need them," he said in a press release.

Newsom's office announced the improved theft numbers last week after the Trump administration ramped up threats to California over allegations of fraud in public benefits. The president has used a wave of prosecutions over social services fraud in Minnesota, some of it allegedly by immigrants, as a reason to send immigration agents to conduct aggressive raids in Minneapolis.

Earlier this month the Trump administration froze some federal social services funding to five Democratic-led states, including California. A judge halted the freeze, which included funds for the CalWorks cash aid program, for now.

The kind of fraud in which Newsom was touting reductions is not traditional "welfare fraud" perpetrated by recipients of public benefits, but rather theft by a third party. Local social services officials have said fraud by recipients is relatively uncommon.

Thieves have been taking advantage of California benefits recipients by using hidden "skimming" devices to steal card numbers from EBT cards loaded with CalFresh food assistance and CalWorks cash welfare benefits. They then duplicate the cards and drain them of cash or make large purchases using CalFresh, before the recipients have a chance to spend their own benefits.

California was particularly susceptible because of the size of the state's social safety net, with roughly 300,000 families receiving cash aid and 3 million receiving food assistance. CalMatters reported in 2023 that the state, previously focused on detecting fraud committed by recipients of the benefits, had also ignored warnings and delayed a proposal to introduce chipped EBT cards.

When the pandemic brought new benefits from the federal and state governments, such as boosted unemployment benefits and stimulus checks, thieves wielding card skimmers followed the money. EBT cards, which contained only a magnetic strip at the time, were among the most vulnerable to theft. Nearly 200 people have been charged across California in the EBT schemes, Newsom's office said.

Since 2023 the state responded to the skimming crisis by issuing chipped EBT cards and introducing an app allowing recipients to freeze their EBT accounts to prevent withdrawals. Last year, Newsom said, the state began using a computer model to detect fraudulent withdrawals and forced resets of some CalWorks' recipients EBT card PINs.

But local welfare fraud investigators said the Newsom's numbers paint too rosy a picture of the theft.

Gregory Mahony, president of the California Welfare Fraud Investigators Association, said he believes the state's reported thefts are undercounted.

The figures are based on how much the state reimburses county welfare departments each month to return victims' benefits. But some recipients don't bother making a report, or report months of thefts but only get some of the money reimbursed, Mahony said.

He also criticized the California Department of Social Services for dropping a requirement in 2023 that victims file police reports each time their benefits are stolen in order to get a reimbursement. That's hurt the state's tracking of theft and fraud, Mahony said.

"This is not a systemic victory," he said in a statement. "It is a delayed and partial mitigation of a crisis long allowed to grow unchecked."