BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2035 (Bradford) - Electronic benefits transfer cards:
skimming.
Amended: June 18, 2012 Policy Vote: Human Services 7-0
Urgency: No Mandate: Yes
Hearing Date: July 2, 2012 Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2035 would provide that recipients of benefits
through the electronic benefits transfer (EBT) system would not
incur any loss of electronic benefits stolen through the
practice of "skimming," as defined.
Fiscal Impact:
One-time costs likely less than $50,000 (General Fund) to
the Department of Social Services (DSS) to develop
appropriate protocols.
Ongoing state-reimbursable county administrative costs or
increased staffing costs to DSS potentially in excess of
$50,000 (General Fund) to the extent established protocols
increase administrative workload to investigate claims for
reimbursement of benefits through skimming.
Minimal automation costs to track recipient claims and
benefit reimbursement for cases subject to skimming.
Unknown, potentially significant ongoing costs (General
Fund) to DSS for reimbursement of CalWORKs grant benefits
that are unlikely to be recovered. Additional ongoing costs
to local agencies for reimbursement of GA benefits.
Background: Existing law provides for the establishment of a
statewide EBT system administered by the DSS for the purpose of
providing public assistance benefits including CalFresh
benefits, California Food Assistance Program (CFAP) benefits,
and cash aid benefits to needy Californians. Regulations issued
by the DSS also provide counties with the option of delivering
CalWORKs and General Assistance (GA) benefits through EBT cards.
All 58 counties use the EBT system to deliver either CalWORKs or
GA benefits, or both.
Under existing law, a recipient does not incur any loss of
AB 2035 (Bradford)
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electronic benefits after reporting that his or her EBT card or
personal identification number (PIN) has been lost or stolen,
and the system is required to provide for the prompt replacement
of lost or stolen EBT cards and PINs.
Data from the DSS for May 2012 indicates nearly 22.5 million EBT
transactions to purchase food through the CalFresh program.
Additional data indicates nearly three million cash purchases
and withdrawals totaling over $291 million at point-of-sale or
automated teller machines (ATMs) through CalWORKs and GA.
In December 2011, a petition for writ of mandate, Carpio v.
Lightbourne, was filed in Los Angeles County Superior Court
alleging that county welfare departments deny replacement of
benefits to recipients whose benefits are stolen electronically
without physical theft of their EBT cards or PINs, or
"skimming".
According to CSO Security and Risk Online, ATM skimming schemes
are responsible for approximately $350,000 of monetary losses
each day in the United States and is considered to be the number
one ATM-related crime.
Proposed Law: This bill seeks to protect recipients of
electronic benefits through EBT cards from the illegal practice
of "skimming," as defined. Specifically, this bill:
Provides that a recipient shall not incur any loss of
electronic benefits that are removed from his or her EBT
account through skimming, as defined, and requires that
the electronic benefits withdrawn by skimming be promptly
replaced after the recipient reports the loss, in
accordance with existing law governing stolen public
assistance issuances.
Requires the DSS to establish a protocol for recipients
to report skimming that minimizes the burden on
recipients, ensures a prompt replacement of benefits, and
ensures program integrity.
Defines "skimming" as a form of theft by which a
recipient's EBT account information or PIN, or both, are
accessed by an unauthorized person who uses that
information to unlawfully remove funds from the
recipient's account.
Includes uncodified legislative findings and
declarations.
AB 2035 (Bradford)
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Staff Comments: The provisions of this bill will require the DSS
to develop protocols to handle claims of lost electronic
benefits through the practice of "skimming," as defined. DSS
will incur one-time increased workload of likely less than
$50,000 (General Fund) to engage resources to develop the
protocols in coordination with input from various stakeholders.
County welfare departments may incur increased administrative
workload to process, determine sufficient justification for
approval, and investigate claims reported due to skimming, the
costs of which could be determined to be state-reimbursable.
Alternatively, the DSS may require resources to process and
investigate these cases. Until the protocols are developed, the
level of administrative workload to county welfare departments
and/or the DSS could incur is unknown but could be significant
and result in ongoing costs in excess of $50,000 (General Fund)
per year.
Because it is unlikely that benefits lost through skimming will
be recovered, both the DSS and the counties will incur ongoing
costs of an unknown amount for reimbursement of CalWORKs and GA
benefits. Costs would be dependent upon the number of CalWORKs
and GA recipients who submit claims for reimbursement of lost
benefits, and the amount of lost benefits claimed due to
skimming. Based on an average CalWORKs grant of $471 per case,
every 100 claims submitted for reimbursement in any one year
would result in $47,100 in additional costs to the state.