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Food Stamp Fraud: Beneficiaries Illegally Sell EBT Cards On Craigslist, Social Media Sites

SACRAMENTO, Calif. (CBS13) - It's a welfare fraud scheme costing U.S. taxpayers $750 million a year. People are illegally selling their electronic food stamp cards on Craigslist and other social media sites for cash.

CBS13 found two people here in Sacramento, both with the same idea, using Craigslist as free advertising to blatantly and illegally sell their state benefits.

Our hidden cameras were rolling as a woman, who we'll call Lorie, told our undercover producer about her brilliant idea to game the system for a quick buck.

"Everyone said I was crazy, but I thought they'd say, 'that's freaking brilliant, man,' " she said.

Another man, who we'll call Joe, rolled up on a skateboard. He showed us his CalFresh card he illegally put up for sale on Craigslist.

"See, right now it still has $116 on it," he told our undercover producer.

Rather than use that money for food like he's supposed to, Joe offered to sell us the card for just $60 cash.

"I just need the money right now," said Joe. "I moved back in with my mom."

He promised to give us his pin number so we could use the card to buy groceries in any store that accepts EBT cards.

Joe said stores don't check for any identification. He freely admits he's done this before for family and friends. He told us not to worry, because we won't get caught.

Lorie doesn't even think what she's doing is wrong.

"I feel justified in what I'm saying and what I'm doing," she said.

She would use the cash for a car to get to work.

"I figure it this way, they're already giving me the money, OK. I'm not making a profit. I'm not burning them. I'm not stealing from them," Lorie said.

Not by a long shot, says Michael Weston with the California Department of Social Services.

"It's against the law," he said.

The CalFresh program is funded by taxpayers and serves more than four million Californians.

The annual cost of food stamp fraud nationwide, is three-quarters of a billion dollars. People attempting to buy or sell food stamps are breaking the law.

"It's an issue that we're aware of. It's an issue we're serious about and that we're monitoring," said Weston.

The department has started using custom software to scour social media daily -- Craigslist, Facebook, Twitter -- in search of illegal ads like the ones Lorie and Joe put up.

"We need to leverage technology ourselves in order to keep ahead of these people," said Weston.

Since monitoring began in February 2012, they've found 404 so-called trafficking posts across California. Investigators have uncovered 2,600 examples of people abusing their benefits and costing taxpayers over $20 million.

"The overwhelming majority of individuals are using the benefits in their intended purpose," said Weston.

But, as our investigation shows, there are those who aren't.

When CBS13 confronted Joe, he clammed up and denied the whole thing before grabbing his stuff and skating off.

The fraud gives people like Shadayvia Smith a bad name. She relies on CalFresh to help put food on the table for her daughter Alyze.

"We're able to buy more fruits and vegetables, and more foods like that. It's a really awesome program," she said.

Smith is disgusted people would cheat a system designed to help families in need.

"I think that's outrageous. It's a program for people that really, really need it. I don't think you should take advantage of the program," said Smith. "If you need it, use it, and selling it to others to get the cash is not the right way to go about it."

When our undercover producer came forward to Lorie about our investigation, she made a complete 180. Before, she was bragging about her plan. After, she was singing a much different tune, saying it was a good thing we caught her trying to cheat taxpayers.

"It's a blessing; it really is," she said. "I just know, somehow, this is going to be a good thing."

Lorie promised to meet us for a sit-down interview, but never did.

There is talk to change food stamp laws, so excessive requests to replace EBT cards can be denied.

The Department of Agriculture says that should help states crackdown against fraud, while still helping people who might often lose their cards -- like the elderly and homeless.

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