Criminals loot Michigan’s $250M monthly food benefits system

Michigan gives $250 million of food benefits monthly to low-income households using outdated magnetic stripe cards. Criminals have stolen millions of those dollars over the last decade, according to testimony given at a July 25 meeting of the Michigan House Oversight Committee.

More than 1.4 million Michiganders rely on Bridge Cards to eat. But you can steal their benefits with the help of a kit available for purchase from Amazon, according to Doug Woodard of the Office of the Inspector General.

Lawmakers also heard from Andrew Kustowski, director of the Special Investigations Division of the Michigan Department of Health and Human Services. In addition, they interviewed Jennifer Allen, the manager of the Benefit Trafficking Investigation section.

Organized criminal groups commit fraud against the Supplemental Nutrition Assistance Program, or SNAP, Kustowski said.

These criminals use computers and the internet to build EBT skimmers to steal benefits, he said.

Criminals stole at least $14 million in 2024 and more than $31 million in 2015, Michigan Capitol Confidential has reported in coverage of fraud in the state’s food benefit program.

The state health department has paid more in fraudulent food benefits than it would cost to fix the problem, which one estimate puts at roughly $8 million.

The department sent more than 269,000 replacement Bridge Cards the same year. The department has not responded to more than 10 requests from CapCon about why it hasn’t updated its technology.

Criminals use fake card readers called skimmers to clone cards and steal benefits from recipients and taxpayers. By analyzing shopping patterns, the state health department can identify skimmers. The state has seized 44 skimmers found at Michigan retailers and stopped the theft of over $16 million in food stamp funds, the Office of the Inspector General reports.

The federal government used to reimburse stolen benefits but no longer does, making Michigan taxpayers answerable for the cost.

Michigan households could submit claims for replacement benefits stolen between Oct. 1, 2022, and Dec. 20, 2024, according to the U.S. Department of Agriculture, but no longer.

Switching from magnetic stripe cards to chipped cards would cost millions but could save much more, said Rep. Jason Woolford, R-Howell.

“I'm not a mathematician, but that seems like a pretty good return on investment,” he said.

Over the past few years, five states have either switched to chipped SNAP cards or are doing so, according to the U.S. Department of Agriculture. Alabama, California, Maryland, New Jersey and Oklahoma lead the nation in making the change.

Michigan has refused to do so and won’t explain why. It has a list of people accused of committing SNAP fraud, but it won’t share that list, CapCon has found.

Reports of SNAP fraud are dispersed across Michigan cities, so the phenomenon is hard to track. It’s even harder when the local government withholds documents that could help investigators. The Ann Arbor Police Department rejected a records request seeking the number of reported SNAP fraud cases in 2024. The same year, the city of Kalamazoo reported 30 counts of SNAP fraud, according to records provided to CapCon.