Report: How Food Stamps Benefit Corporations (EBT is Big Business)

We have written before about the big business of Food Stamps in this country. To Pizza Hut lobbying for Food Stamp use in their restaurants, to JP Morgan servicing the program for hundreds of millions of dollars, it’s not hard to see why SNAP, EBT, WIC, Food Stamps, whatever are becoming more entrenched in our economy and society. There’s a lot of money to be made in these programs.

I feel like it needs to be said, again, that no one should go hungry, especially not children if we can help it. Life can be hard, very hard sometimes, and we certainly do not begrudge anyone who must avail themselves of food assistance. There are better ways to deliver such services other than through the government, but that is not the point of this post, nor of the attached report, at least primarily.

What is of particular concern is that corporations now have a vested interest in seeing food assistance programs expand. Food Stamps have become a profit center for some companies, and that is a very sad and potentially dangerous development for our country.

(From: The Report : Profits from Poverty)

Originally conceived as a means to prop up sagging crop prices to support American farmers, the Food Stamp Program, now called the Supplemental Nutrition Assistance Program, or SNAP, has exploded into a welfare program that costs tax payers a record $75.67 billion in 2011.Almost everyone has heard this story, but few realize that only three corporations have cornered the market for providing SNAP services to the needy and destitute. According to JP Morgan, the largest food stamp industry player, the business of food stamps “is a very important business to JP Morgan. It’s an important business in terms of its size and scale…. Right now volumes have gone through the roof in the past couple of years or so. The good news from JP Morgan’s perspective is the infrastructure that we built has been able to cope with that increase in volume.” And JP Morgan has good reason to be pleased, since the bank profits from programs designed to help the poor.

An investigation by the Government Accountability Institute has found that:

Three companies – J.P. Morgan EFS, Affiliated Computer Services, and eFunds – provide EBT services for 49 states and 3 US territories.

Since 2004, 18 of 24 states who contract with J.P. Morgan to provide welfare benefits have contracted to pay $560,492,596.02. New York alone has a seven-year contract worth $126,394,917.

Projected average food stamp spending post-recession will be 175% greater than prerecession average spending, from $28 billion to $77 billion.Since 2009, 32 states have followed the USDA’s suggestion to use Broad Based

Categorical Eligibility “as a way to increase SNAP participation and reduce State workloads.”

Changing the rules for eligibility, along with state-level changes in

application methods, has contributed to a 70 % increase in food stamp participation from 2007 to 2011.

Lax security by EBT processors and states invites food stamp fraud, often through social media. There are understaffed fraud investigation units at both the federal and state level. For example, Florida has just 63 staff positions to police approximately 3 million EBT users state-wide. These investigators not only handle TANF and SNAP eligibility fraud, but also EBT trafficking, Social Security Disability and Medicaid eligibility fraud, Emergency Financial Assistance for Housing, and Low Income Energy assistance, among many others.

Click here for the report.