On Maryland’s path to becoming one of the country’s biggest targets for fraud aimed at benefits for lower-income residents, the problem looked, at first, like maybe it involved just a few thousand claims.

But the theft went largely unchecked, and the claims, paid off by taxpayers, kept rising.

By the time the state started a new reimbursement process in early 2023, what had been less than $1 million in benefits the state had to restore to victims of fraud quickly turned into $4.3 million over two years. One year later, the state has paid nearly $26 million for claims since the start of 2021 to 39,000 households that started out needing extra help putting food on the table, then fell victim to a system that advocates say is still sorely lacking in security.

“This theft is real. It’s nationwide. It is essential that Marylanders can meet their food needs,” said Michele Gilman, a law professor and director of the Saul Ewing Civil Advocacy Clinic at the University of Baltimore School of Law. “But the other angle of it is protecting the public. This money is flowing into the hands of criminals and we know there are technological ways to prevent that.”

Gilman and others are hopeful the state’s technology may soon catch up — and the bleeding, finally, will stop.

On Wednesday, the Maryland Board of Public Works is scheduled to vote on a new contract for the operator of the state’s electronic benefits transfer (EBT) system — the method in which 382,000 households access the Supplemental Nutrition Access Program (SNAP) and about 32,000 benefit from cash assistance.

Key to the new contract — according to state Department of Human Services officials who are pushing for it — are new requirements to implement chip technology in EBT cards. In Maryland and across the country, the debit-type cards still have just the traditional magnetic stripes. Those are vulnerable to “skimming,” in which a device is used to read and access a card’s data.

A 2023 state law required chips in all EBT cards issued in Maryland starting last year. But the rollout has been slow, leaving families vulnerable to seeing their essential assistance disappear. Though the state has improved its system and is now usually quick to reimburse stolen funds, it’s been extremely challenging for SNAP beneficiaries, the advocates say.

“The longer we wait, the more people go hungry and the more criminals are lining their pockets with Marylanders’ money,” Gilman said.

Theft from ‘poorest of the poor’

Previously known as food stamps, SNAP is the federally funded program that pays a minimum $23 per month and, in Maryland, an average of about $327 per month per household for food purchases. Funds are deposited directly into EBT accounts and can be spent using what’s called the Independence Card. Eligibility depends on a number of factors, including income (for the current year, a family of four with a gross monthly income $3,250 or less or a net monthly income of $2,500 or less could qualify).

“The only people who can qualify for these benefits are the poorest of the poor,” said Cornelia Bright Gordon, director of advocacy for the nonprofit Maryland Legal Aid, which offers legal services to low-income individuals.

When “every dollar is of paramount importance,” she said, it makes the theft of that money that much more painful. Gordon said her group’s clients have seen their monthly food allowances vanish in minutes due to theft. Before changes to state law and the start of an online portal to file claims last year, the process was even more difficult, with victims required to file police reports and other paperwork to make claims, she said.

State Sen. Katie Fry Hester, a Howard County Democrat, said state lawmakers were spurred to act after seeing a spike in theft in 2021 and 2022 — a trend seen across the country as credit card companies adopted more secure chip technology while EBT operators didn’t. A law she sponsored in 2023 required the state to reimburse EBT account holders and implement new security measures, including chip technology by Oct. 1, 2023.

“I never thought we’d hit $24 or $25 million,” Hester said, referring to the amount of reimbursements DHS reported in early May to the state procurement board. That number has since risen, to $25.9 million in reimbursed benefits for theft since Jan. 1, 2021, a Department of Human Services spokesman said Friday. About $17.8 million of that came from federal funds and $8.1 million came from the state.

“It’s a huge amount, and it makes the microchip card that much more important, because it’s the only thing that can fully stop it,” Hester said.

According to data from the U.S. Department of Agriculture, Maryland ranks second in the number of claims of stolen SNAP benefits filed in the last year, at 33,500. That data is reported by states directly and not fully up to date. California, for example, has not reported data but is considered to potentially be the most impacted state. A recent U.S. Department of Justice notice indicated complaints between June 2022 and February 2024 in that state totaled $181 million, and California has just started rolling out chip cards.

Elisabet Eppes, deputy director of Maryland Hunger Solutions, said Department of Human Services “has done a really great job of springing into action” to ensure reimbursements for theft have been awarded easily and quickly. Though families were not originally being reimbursed in full, that policy changed earlier this year and victims of theft have been receiving payments quickly.

But Maryland and its EBT vendor, Conduent State & Local Solutions, also need to “pick up the pace” on the technology, she said.

Eppes said her group has worked with repeat victims of theft, adding “insult upon injury” as the state inches toward implementing chip cards. She said an 18-month timeline ending around mid-2025 for chip cards, indicated in Department of Human Services statements earlier this year, was not fast enough.

“We know that when it comes to services and products that are geared toward lower-income customers, they are seen as second-tier customers and oftentimes the technology that is available is not as modern as it should be,” Eppes said. “We see that as a lack of prioritization from the companies themselves, but we, of course, think Maryland DHS could be doing a better job, as well.”

Inching toward better security

Intermittent steps toward more secure EBT cards have come in a few forms in the last year.

Interactive voice response, or IVR, fraud-detection was incorporated to try to prevent phishing attempts, and an app launched in late 2023, called ConnectEBT, allows cardholders to lock and unlock their cards.

The advocates said the moves have been positive, but haven’t had their full intended effect.

“Any step to reduce this theft is great, but what I’ve heard on the ground is they’re sort of half measures,” Gilman said. “Not all cardholders know about them, not all are able to access or implement them, so having chip cards would be a better solution.”

Eppes said the card-locking and unlocking technology has been a step in the right direction, but it’s only reached a small portion of cardholders.

She said her group works directly with people to submit applications for theft reimbursement, and “something we’ve learned is folks who experienced theft did not know about the ConnectEBT app.”

Other recommendations so far have been frequently changing account passwords, which does not always prevent theft and can lead to users being locked out of their accounts, she said.

Gordon, of Maryland Legal Aid, put it this way: “Security is great, and our clients deserve that. But ease of use of these programs and protections are paramount.”

High stakes, high hurdles

Though the Department of Human Services has begun working with Conduent to implement chip cards, the agency is putting an emphasis on speed in its push Wednesday for a new contract.

The four-year contract worth just under $20 million to continue with the same vendor is being contested by the other major EBT vendor in U.S., Fidelity Information Services LLC, which submitted a $31.3 million bid.

Waiting for Fidelity’s appeal to move forward, however, could result in another delay of nine months to two years — all but ensuring the state is forced to pay back even more in stolen benefits, according to a memo from Department of Human Services officials to the Board of Public Works.

The three-member board consists of Gov. Wes Moore, Comptroller Brooke Lierman and Treasurer Dereck Davis, all Democrats, and contracts that appear on its agenda are almost always approved unanimously, even if they’re contested.

Gilman said it was common for bidders to appeal or sue in response to losing a contract. She appreciated the state’s push to move forward without delay, especially because “the stakes are really high here.”

“It’s about whether children are eating or not,” she said.