Last summer, Seattle TV station KING 5 discovered that state welfare recipients were withdrawing money from ATMs inside more than 100 casinos, card rooms and bingo halls. It is against state law to spend welfare money on gambling.
A follow-up investigation found that the Electronic Benefits Transfer cards were used inside strip clubs, too.
Now, state Sen. Mike Carrell, R-Lakewood, is touting a bill that would ban the use of these debit cards at tattoo parlors, bars and gun shops, too.
About 60,000 Washington residents are issued the cards, and the money is supposed to be used to care for needy children. The location of these ATMs suggests that taxpayer money is being wasted on playtime for adults.
A similar welfare scandal unfolded in California, when the Los Angeles Times reported that the debit cards were being used inside casinos and on cruise ships. That’s right: cruise ships. In addition, state welfare money was being withdrawn from every other state in the union, the U.S. Virgin Islands and Guam. Abuses have made headlines in Michigan and New York, too.
Back in Washington state, EBT cards and their PINs are sometimes sold on sites like Craigslist, according to Carrell. Then the sellers report them stolen and get new ones. He says about 37,000 cards a year are reported lost or stolen and are replaced.
This abuse of a compassionate state program is wrong on its face, but it’s especially egregious at a time when the state is struggling to balance the budget.
A variety of legislative fixes have been suggested. The state could limit the amount of cash that can be withdrawn and ban out-of-state transactions. A fraud investigation unit could be established at the state auditor’s office. The state could protect whistle-blowers who report fraud. ATM companies could be asked to block EBT cards at certain locales.
Susan Dreyfus, head of the Department of Social and Health Services, doesn’t quarrel with the need to crack down, but she would like for the investigating unit to be in her department. For the sake of credibility, it would make more sense for this to be a function of the auditor’s office or the attorney general’s.
Abuses like this harm the mission of a worthy program. They create a stigma that taints law-abiding recipients. To keep this running as a credible function of government, officials need to take strong action.