Some New York City bodegas and delis have allegedly been operating as fronts for organized Electronic Benefits Transfer (EBT) card-skimming schemes, using hidden devices to steal information and ultimately taxpayer-funded benefits, according to a warning from a fraud expert.
Criminals attach hidden skimming devices to checkout payment terminals to capture EBT card data while using pinhole cameras or keypad overlays to record customers' PINs, according to law enforcement. The stolen information is then used to create counterfeit cards and drain Supplemental Nutrition Assistance Program (SNAP) benefits, costing consumers and financial institutions more than $1 billion each year.
"A large percentage of these convenience stores are actually EBT ATMs," said Haywood Talcove, CEO of LexisNexis Risk Solutions Government. "Their sole purpose is to traffic cards, not sell food."
Talcove made this comment after joining the Secret Service on a recent fraud operation in New York City, where he witnessed expired food and other signs of suspicious activity. He said he saw firsthand a can of tuna that expired three years ago, pancake syrup that was two years expired, and sardines that were expired.
According to law enforcement, the agency's New York Field Office conducted a three-day operation across Brooklyn, the Bronx, and Queens in June that uncovered 35 illegal skimming devices and prevented an estimated $36.5 million in fraud. This was the agency's fourth anti-skimming operation in New York City this year.
Eligible households receive monthly SNAP benefits on an EBT card, which works like a debit card and is used to buy eligible food at authorized retailers. Talcove said he saw multiple stores on the same block with shelves stocked with expired food, leading him to believe some were operating primarily to facilitate EBT fraud rather than as legitimate grocery sales.
During the operation, the Secret Service uncovered skimming devices on checkout payment terminals that can capture EBT card data that criminals can encode onto counterfeit cards for unauthorized purchases or withdrawals. Talcove said this type of operation is often carried out by organized crime groups, which he believes originate in Eastern Europe.
These groups have been known to earn significant profits from the scam, with one instance involving the theft of as much as $1.2 million in stolen cash, which was then shipped overseas. The runners installing skimming devices earn about $150, according to law enforcement.
Talcove said the problem with the SNAP program is that it does not require itemized purchase records, making suspicious transactions harder to detect. He also noted that the program has fundamental flaws in its administration, including weak identity verification, outdated card technology, and limited purchase records.
Talcove proposed a "concerted effort" to remove suspicious stores from the SNAP program, upgrading EBT cards to chip technology, strengthening identity verification, and monitoring large purchases to detect potential fraud.
A New York City Department of Social Services spokesperson said EBT skimming is a "nationwide crisis," stating that the city has been working closely with state officials and law enforcement to help "vulnerable" New Yorkers who may be impacted. The state has announced plans to begin replacing current EBT cards with more secure, chip-enabled cards in early 2027.
