A sophisticated wave of fraud has been sweeping the United States, compromising the Supplemental Nutrition Assistance Program (SNAP). But this time, the damage extends beyond benefit recipients.

Criminal networks are cloning Electronic Benefit Transfer (EBT) cards and laundering stolen funds through legitimate retailers, many of whom proceed unaware of the exploitation. These incidents expose not only the predatory precision of the perpetrators, but also a systemic vulnerability within a program relied upon by millions of Americans. Recent investigations have prompted a surge in reports from merchants across the country, detailing spikes in high-value EBT transactions later traced to recipients in unrelated states. These individuals, upon reviewing their balances, discover unauthorized charges processed in stores they have never visited. For merchants, these transactions appear routine: items are scanned, a PIN is entered, and payment is accepted. From the merchant’s perspective the transaction appears valid, until a dispute arrives. Federal agencies confirm that many of these operations are orchestrated by organized criminal organizations. Using skimming devices attached to payment terminals, these actors harvest card data and PINs. The stolen credentials are then encoded onto blank magnetic stripe cards, often plastic blanks or gift cards, and distributed to operatives, or “runners”, who target specific retailers. Stores are frequently selected based on the resale value of their inventory, which is rapidly liquidated through gray market distribution channels.

At the heart of this crisis lies a critical technological vulnerability: EBT cards continue to operate on magnetic stripe systems, which are easily cloned and lack the encryption and dynamic authentication standards now common in modern payment networks. By contrast, EMV chip cards and tokenized mobile payments, both widely adopted across traditional credit and debit networks, offer significantly greater security. While some states have begun piloting mobile wallet integrations, many others lag behind.

For retailers, the consequences of this disconnect are severe. Reputational damage, community backlash and operation disruption are common, particularly in cases where retailers are falsely associated with theft. Through no fault of their own, these merchants lack the tools necessary to distinguish valid cards from cloned ones, and with no federal processes for proactively verifying card authenticity, the result will continue to be legitimate retailers absorbing the costs of systemic design flaws and fraud.

This dynamic presents a national challenge. Annually, SNAP distributes more than $100 billion in benefits, serving more than 42 million individuals each month. When fraud is perpetrated and funds are intercepted, recipients suffer direct and immediate harm. When merchants are victimized, the integrity of the entire program is questioned.

In light of these escalating threats, structural reforms are no longer optional. They are imperative. To address this, SNAP infrastructure must be modernized with secure chip-enabled cards and mobile wallet functionality. Merchants should be equipped with federally supported validation tools to reduce their exposure and liability, and enforcement must shift from reactive interdiction to proactive, intelligence-driven coordination across jurisdictions.

A LexisNexis study found that for every $1 lost to SNAP Fraud, agencies incur $3.72 in related losses. Other analysis estimates annual losses as high as $25 billion in misappropriated benefits. Though figures may vary, an underlying trend remains clear; SNAP Fraud is on the rise.

Beyond a mere matter of administrative efficiency, this is an affront to public trust, and until these structural vulnerabilities are addressed, the nation’s most vulnerable will remain exposed, and continue to pay full price for the SNAP program.