New York City bodegas and delis are allegedly being used as fronts for organized Electronic Benefits Transfer (EBT) card-skimming schemes, according to Haywood Talcove, CEO of LexisNexis Risk Solutions Government. These establishments, some stocked with expired food, reportedly utilize hidden devices to steal card information and divert taxpayer-funded benefits.
Criminals attach skimming devices to payment terminals to capture EBT card data, employing pinhole cameras or keypad overlays to record customers' personal identification numbers, the FBI states. This stolen information is then used to create counterfeit cards and deplete Supplemental Nutrition Assistance Program (SNAP) benefits, resulting in over $1 billion in annual losses to consumers and financial institutions.
"A large percentage of these convenience stores are actually EBT ATMs," Talcove told Fox News Digital. "Their sole purpose is to traffic cards, not sell food."
Talcove, who accompanied the Secret Service on a recent fraud operation in New York City, described witnessing products with years-old expiration dates, such as tuna and pancake syrup. He noted the existence of an industry built around trafficking EBT cards, diverting funds away from individuals and families in need.
The U.S. Secret Service's New York Field Office conducted a three-day operation in June across Brooklyn, the Bronx, and Queens, uncovering 35 illegal skimming devices and preventing an estimated $36.5 million in fraud. This operation was the fourth of its kind in New York City this year.
SNAP benefits are provided to eligible households monthly via an EBT card, functioning similarly to a debit card for purchasing authorized food items at approved retailers, according to the U.S. Department of Agriculture.
Talcove observed multiple stores on the same block with shelves stocked with expired goods, leading him to suspect they were primarily facilitating EBT fraud rather than conducting legitimate grocery sales. He questioned the economic viability of such small stores selling identical items, concluding that their primary function was not food sales.
Expanding Fraudulent Operations
While the fraud may seem isolated, Talcove asserts it is deeply rooted and involves organized criminal groups. The schemes are described as transnational, exploiting empathy by preying on the necessity of food assistance.
Michael Peck, assistant special agent in charge of the U.S. Secret Service's Criminal Investigative Division, noted that criminals have been found to ship significant amounts of stolen cash overseas, with individuals installing skimming devices earning approximately $150 per installation. Reports indicate that many of the organized crime groups behind these EBT skimming schemes originate in Eastern Europe and live lavishly off the proceeds.
Talcove stated that the fraud extends beyond bodegas and delis, with other types of retailers also implicated. He pointed out that the SNAP program's lack of requirement for itemized purchase records makes detecting suspicious transactions more difficult. Talcove cited examples of a laundromat and even a strip club on the West Coast allegedly accepting EBT payments.
He characterized the fraud as the "perfect scam" due to weak identity verification, outdated card technology, and limited purchase record requirements. Talcove identified three key factors: low risk of apprehension, the government's continuous funding, and fundamental administrative flaws within the SNAP program.
The primary victims, according to Talcove, are the SNAP-eligible families who are deprived of necessary food. He emphasized that taxpayer money is being lost while criminals exploit vulnerable populations.
Proposed Solutions and Systemic Issues
To combat this fraud, Talcove proposed a coordinated effort to remove suspicious stores from the SNAP program, upgrade EBT cards to include chip technology, enhance identity verification processes, and monitor large transactions for potential fraud. He also advocated for a concerted effort to remove suspicious stores from the SNAP program.
A spokesperson for the New York City Department of Social Services acknowledged EBT skimming as a "nationwide crisis" and stated that the city is collaborating with state officials and law enforcement to protect vulnerable New Yorkers.
New York Governor Kathy Hochul announced in February that the state will begin replacing current EBT cards with more secure, chip-enabled cards in early 2027 to combat fraud.
While acknowledging the Secret Service's efforts, Talcove argued that arrests alone are insufficient to solve the problem, stating that the fraud is deeply embedded in the current system. He described the disguised operations as "unconscionable."