BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2035|
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THIRD READING
Bill No: AB 2035
Author: Bradford (D)
Amended: 8/21/12 in Senate
Vote: 21
SENATE HUMAN SERVICES COMMITTEE : 7-0, 6/12/12
AYES: Liu, Emmerson, Berryhill, Hancock, Strickland,
Wright, Yee
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/16/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 73-0, 4/30/12 - See last page for vote
SUBJECT : Electronic benefits transfer cards: skimming
SOURCE : Western Center on Law and Poverty
DIGEST : This bill protects recipients of CalFresh
benefits from losses due to the practice of electronic
skimming of their electronic benefit transfer (EBT) cards.
Senate Floor Amendments of 8/21/12 clarify the definition
of the electronic theft of benefits in which the EBT card
itself is not used by the perpetrator of the theft,
commonly known as "skimming," and provide clarification of
the Department of Social Services' process to replace lost
benefits due to skimming.
CONTINUED
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ANALYSIS :
Existing law:
1. Establishes, under federal law, the Supplemental
Nutrition Assistance Program (SNAP) pursuant to the Food
Stamp Act of 1964.
2. Establishes, under state law, the CalFresh program,
which provides assistance using federal SNAP funds to
low-income families in order to mitigate hunger,
undernutrition and malnutrition in the state. In
California this is accomplished through distribution of
EBT cards to CalFresh recipients.
3. Creates through the Electronic Benefits Transfer Act an
EBT system to store information and distribute benefits
to recipients of CalFresh. Regulations issued by the
Department of Social Services (DSS) give counties the
option of also delivering CalWORKs (California Work
Opportunity and Responsibility to Kids) and General
Assistance benefits through EBT cards.
4. Provides that a recipient does not incur any loss of
electronic benefits after reporting that his/her EBT
card of the personal identification number has been lost
or stolen.
This bill:
1. Makes a series of findings and declarations about the
need to address a recipient's loss of benefits due to
electronic skimming.
2. Provides that a recipient shall not incur any loss of
electronic benefits that are removed from his/her EBT
account through skimming and requires that electronic
benefits withdrawn by skimming be promptly replaced
after the recipient reports the loss, in accordance with
existing law governing stolen public assistance
issuances.
3. Requires that DSS establish a protocol for recipients to
report skimming that minimizes the burden to recipients
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and ensures a prompt payment of benefits.
4. Defines skimming as a form of theft by which a
recipient's EBT account information, or "PIN" number, or
both, are accessed by an unauthorized person, who uses
that information to unlawfully remove funds from the
recipient's account.
5. Clarifies the definition of the electronic theft of
benefits in which the EBT card itself is not used by the
perpetrator of the theft, commonly known as "skimming,"
and provides clarification of DSS' process to replace
lost benefits due to skimming.
Background
EBT usage . Food benefits for CalFresh recipients are
distributed through an EBT system, which allows recipients
to access funds at point-of-sale terminals, automated
teller machines (ATMs) and other electronic fund transfer
devices. EBT cards look similar to ATM debit cards, and
are swiped through the same machines using magnetic strips
to transfer information.
In addition to delivering CalFresh benefits through the EBT
system, all of California's 58 counties also deliver either
CalWORKs or General Assistance benefits, or both, through
the EBT cards. According to DSS, in May 2012 there were
nearly 22.5 million EBT transactions to purchase food
through the CalFresh program and nearly three million cash
purchase or withdrawals at point-of-sale or ATM machines
through the cash benefit programs, CalWORKs and General
Assistance.
Carpio v. Lightbourne . In December 2011, Evelyn Carpio
filed suit against DSS and its Director, Will Lightbourne,
claiming that DSS illegally refused to replace benefits
that were stolen electronically. On October 5, 2009,
thieves stole $720 of CalWORKs cash assistance from her EBT
account, even though the EBT card never left her
possession. Ms. Carpio, a single mother who works
part-time as a sales associate at a department store,
discovered the loss when she attempted to access her funds
at a Food4Less that afternoon. She argued in her filing
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that the state provides for replacement of stolen EBT
benefits through the state's EBT statute, however
acknowledges that DSS does not have procedures in place to
replace lost benefits when the card itself is not stolen.
Although her benefits eventually were restored after two
years of appeals, Ms. Carpio argues in her lawsuit that
counties continue to deny restoration of benefits that are
lost through electronic theft. The lawsuit seeks to
establish that DSS must replace stolen benefits in a timely
manner, however it does not seek to remedy the need for
state protocols regarding skimming theft. The next
conference in the case is set before the judge on September
6.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time costs likely less than $50,000 (General Fund) to
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 General
Assistance benefits.
SUPPORT : (Verified 8/22/12)
Western Center on Law and Poverty (source)
California Bankers Association
California Catholic Conference, Inc.
California Coalition of Welfare Rights Organizations, Inc.
California Reinvestment Coalition
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Coalition of California Welfare Rights Organizations
Consumer Federation of California
Insight Center for Community Economic Development
Legal Services of Northern California
National Association of Social Workers
ARGUMENTS IN SUPPORT : The author states that the
emerging practice of illegally "skimming" account numbers
and personal identification numbers (PIN) of electronic
cards leaves low-income recipients who rely on of CalFresh
benefits without protections afforded other victims of
theft. A recent lawsuit highlights the lack of process
that would allow a victim this type of theft to recover
their EBT benefits. While California law provides recourse
for recipients whose EBT cards have been stolen, it does
not extend the same protection for individuals whose EBT
benefits have been stolen through the act of skimming
because the victims never lose possession of their cards.
One of the primary purposes of the EBT system, as stated in
the EBT Act, is "to afford public social services
recipients the opportunity to better and more securely
manage their financial affairs."
ASSEMBLY FLOOR : 73-0, 4/30/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Bonilla, Bradford, Buchanan,
Butler, Charles Calderon, Campos, Carter, Chesbro,
Conway, Cook, Dickinson, Donnelly, Eng, Feuer, Fletcher,
Fong, Fuentes, Beth Gaines, Galgiani, Garrick, Gatto,
Gordon, Gorell, Grove, Hagman, Halderman, Hall, Harkey,
Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman,
Jeffries, Jones, Knight, Lara, Bonnie Lowenthal, Ma,
Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel
Pérez, Portantino, Silva, Skinner, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. Pérez
NO VOTE RECORDED: Blumenfield, Brownley, Cedillo, Davis,
Furutani, Logue, Smyth
CTW:m 8/22/12 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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