From Pymnts · PYMNTS · · 1m 20s
Outdated payment tech fuels welfare fraud epidemic
Romanian crime gangs exploit 1960s magnetic stripe technology to steal hundreds of millions from government benefit systems.
In brief
Romanian crime gangs exploit 1960s magnetic stripe technology to steal hundreds of millions from government benefit systems. Most states still issue EBT cards with magnetic stripe technology instead of chip or tap-to-pay systems, making them easy targets for organized theft. Originally reported by Pymnts.
Gangs steal from welfare using old tech
Romanian organized crime groups are exploiting 1960s magnetic stripe technology on government benefit cards to steal hundreds of millions of dollars from the U.S. welfare system.
How the skimming scheme works
Criminal builders construct skimming devices that merchants easily miss, stealing benefits when customers swipe government-issued debit cards at stores.
Multiple theft tactics deployed
Scammers use bots to guess welfare account numbers, run fake transactions through cloned card machines, and convert stolen funds to cryptocurrency to send back to Romania.
“Sadly, business is booming.”
Most states still use magnetic stripes
Very few states have upgraded from magnetic stripe EBT cards to chip cards or tap-to-pay systems, leaving low-income Americans vulnerable to theft.
“The insanity of letting people continue to use a glorified hotel-room key is akin to donating money to the Romanians.”
EBT cards are easiest targets
While any magnetic stripe card faces risk, authorities say EBT cards are the simplest for criminals to exploit compared to other payment systems.
Fraud reshaping card issuer strategy
Card issuers now prioritize fraud prevention as a growth strategy, with 45% of high-value issuers planning to invest in scam detection over the next 12 months.
The short version
Most states still issue EBT cards with magnetic stripe technology instead of chip or tap-to-pay systems, making them easy targets for organized theft.
