The U.S. Department of Agriculture hopes to reduce food stamp fraud through the use of electronic cards, similar to those used in automatic bank teller machines, that are designed to disburse several kinds of benefits to low-income households.
Since November 1989, 4,700 households in several inner-city Baltimore neighborhoods have been participating in a pilot program to see whether these cards deliver public assistance, child support and food stamp payments more efficiently than do traditional paper vouchers.
Participants are issued an "Independence Card" and must then select a personal identification number. The card entitles them to shop at any authorized grocery in their area. At the check-out line, the customer punches in the ID number and a cashier swipes the plastic card through a kind of mini-computer provided by the USDA. The machine verifies the card and electronically subtracts the purchase from the buyer's account. If the customer is entitled to other benefits -- such as child support -- that money is available through the grocery store's automatic teller machine or any MOST machine in Maryland, Virginia or the District. So far, incidents of fraud have been minimal, officials say. USDA authorities say they believe such cards will prove to be less negotiable than paper food stamps, although they acknowledge the possibility that users will attempt to sell or barter with their cards. So far, USDA officials say, two people have been arrested and face state and federal charges for unauthorized use of the cards.
No statistics are yet available to assess the success of the program, which is expected to cost $25.7 million over five years. Peg McNamara, who directs the pilot project for Maryland's Department of Human Resources, said she believes the program is successful and already has eliminated weeks of labor-intensive paperwork, such as mailing tens of thousands of benefit notices to food stamp recipients.
"We're getting a firm sense from the clients, the grocers and everyone involved that this is making people more responsible and more accountable," McNamara said. "We had hoped for $1 million savings over five years. Early projections show it's more like a savings of $1 million a year in state operating costs alone."