If you’ve been paying attention the last 5 years, you will notice that there is a growing proliferation of prepaid debit cards in the country. It used to be dominated by prepaid brands like the Rush Card, Vanilla Visa Card, Netspend and the Walmart Moneycard. However, lately, banks are also entering the space, with Chase, Citibank and Wells Fargo all offering their own branded reloadable debit cards. Other new entrants include the Bluebird Card by American Express, which they launched in partnership with Walmart. Another popular one is the Green Dot card. Here are three things you should know about these prepaids.
The first thing you should know about these bank issued cards is that they can either be reloadable or non-reloadable. With the non-reloadable ones, after you add money to it the first time, you cannot top it or reload it even if you wanted to. Once the funds you added when you purchased the prepaid card are used up, the card is worthless. These types of cards are great for short term needs, like travel expenses, holiday shopping to help you stay on budget or as a surprise allowance for your high school or college student to use. It may also be given as gifts for any occasion, including birthdays, house warming parties and anytime you want to give someone money but don’t want to give them cash because you may think it is insensitive.
The reloadable prepaid come in may forms. Most are issued by banks and aimed at the general public, especially people in unbanked communities. That is why prepaid cards like the Walmart American Express Bluebird Card have been very successful because they are aimed at people without traditional checking accounts or debit cards. However, reloadable prepaid debit cards are also issued by the government to pay benefits. States use them to pay unemployment benefits and child support payments under the Eppicard prepaid debit card program. They are also used to pay snap benefits, under what is called the EBT program. Most of these EBT Debit cards are issued by banks on behalf of the states that run the programs. Eligible beneficiaries apply for the programs through their appropriate state agencies, then once they are approved for food assistance, then they are issued prepaid debit cards called EBT cards. Then their monthly benefit payments are automatically deposited on the card at the due date for their convenience and they can use the card anywhere the card issuer’s cards are accepted, just like a regular debit card is used.
The Supplemental Nutrition Assistance Program (also known as SNAP Benefits) is a program run by the United States Department of Agriculture to provide nutrition assistance to low income household. This is to help them purchase nutritious foods that they would not otherwise be able to buy due to limited household income. The program is popularly called Food Stamps. Once a household is approved for the program, they are issued a debit card called an EBT card, which can be used to buy food that is on the approved list. The SNAP benefits program is run at the state level but funded at the federal level. The federal government sets the broader guidelines for the program and states have to administer the program with these minimum standards set at the federal level but can add additional criteria specific to their states.
SNAP Benefits Fraud Video
Like many government programs, the food stamps program is a source of fraud and not a week goes by without a group of people getting arrested in one state or another and charged with food assistance fraud and YouTube is littered with videos of people that have been arrested and prosecuted for illegally using food support money. There are several ways this fraudulent activity happens. The first method is where people with Georgia EBT cards conspire with retailers to trade their funds for cash. They will swipe their entire balance at the store as if they are purchasing approved foods, then the retailer will give them cash instead – but it will be less than the value on the card. This way, the retailer pockets the difference and the cardholder gets cash to buy whatever they want.
Another method by which this kind of fraud happens is where retailers allow people to buy food that is not on the approved list. According to the USDA, these are the approved food items for EBT purchases:
Households CAN use SNAP benefits to buy:
- Foods for the household to eat, such as:
- breads and cereals;
- fruits and vegetables;
- meats, fish and poultry; and
- dairy products.
- Seeds and plants which produce food for the household to eat.
In some areas, restaurants can be authorized to accept SNAP benefits from qualified homeless, elderly, or disabled people in exchange for low-cost meals, especially those on social security benefits.
As you can see, the focus is on nutritious foods. But those who want to buy processed or cooked food are able to get around these limits my conspiring with retailers to get what they want at the expense of the tax payers whose aim for this program is to help households in need by the basic foods they need to be able to live a healthy lifestyle. But usually, some people who get these benefits want to use the money to buy unhealthy food, drugs and alcohol. The federal government is serious about catching these people and as you can see from the videos above, a lot of people are caught and sent to prison for a very long time for committing SNAP benefits fraud. Watch the video and pay attention to what they are being charged with.