Michigan food stamp fraud spiked nearly 400% from 2023 to 2024

Payments caused by fraud in Michigan’s food stamp program jumped by 387% from fiscal year 2023 to 2024, according to documents obtained by a records request. The increase comes at a time when Michigan officials still haven’t switched to safer, more secure cards with embedded microchips.

The Michigan Department of Health and Human Services approved 592 of 651 requests in fiscal year 2023 to replace stolen benefits, for a total of $181,778.

About 800,000 Michigan households with low incomes purchase food through the Supplemental Nutrition Assistance Program, commonly known as food stamps. Money from the program is loaded onto state-issued Bridge cards, which recipients can use at approved vendors such as grocery stores. If a criminal rather than the intended recipient uses those funds, the state health and human services department will replace the lost benefits.

The state approved 1,664 of the 1,926 requests filed for replacement benefits during the 2024 fiscal year, for a total of $884,947. The number of claims submitted increased by 196% from the previous year, and the number of claims approved went up by 181%.

Chip EBT Proposal 20250410 Draft by mcclallen on Scribd

The SNAP program is overseen by the federal government but run by state health departments.

In November 2024, the U.S. Department of Agriculture urged Gov. Gretchen Whitmer and the state health department to stop using cards with magnetic strips and instead use chipped cards. Michigan has not yet made the switch. In June 2024, criminals stole $250,000 from Michigan families through the SNAP program, Michigan Capitol Confidential reported in April.

Making the change from magnetic-strip cards to chipped cards would incur about $16.3 million in one-time costs, according to an April 3, 2025, pitch Fidelity National Information Services made to the state, which CapCon obtained through a records request. Ongoing expenses would likely run to $2.7 million a year, the company said.

MI EMV FIS Estimate Summary by mcclallen on Scribd

The federal government would pay half the cost of moving to chipped cards, leaving Michigan with a bill of $8.15 million, according to a state health department proposal CapCon obtained through a records request. Most of that cost would fall in four areas: $9.9 million for mass mailings for new cards, $3.3 million for system and technology changes, $1.4 million for notification letters and $1.8 million for customer service costs.

Over one weekend in 2025, Michigan reported a loss of over $75,000 in electronic benefit transfers that took place at several out-of-state retailers. The transfers involved card-cloning and skimming fraud scheme, state documents say. For fiscal year 2023, the Michigan Office of Inspector General conservatively estimates a yearly loss of roughly $3 million in electronic benefit transfers.

Switching from magnetic strips to chipped cards is essential to secure the food program’s integrity, Haywood Talcove, CEO of LexisNexis Special Services Inc, told CapCon in an email. His company sells fraud prevention software and services to unemployment programs in 20 states, as well as to major U.S. banks.

“This conversion presents a unique and timely opportunity to identify and remove criminal groups exploiting the system through stolen and synthetic identities,” Talcove wrote. “Before issuing cards en masse to the 1.5 million recipients, we must validate each address, confirm residency, and verify identity. This step alone could flush out a significant portion of fraud in the program. I estimate 20%!”

Michigan could benefit if it moves to chipped cards and other states do not, Talcove said. “As more states move to chip technology, there will be a migration of fraud to those that don’t,” he wrote. “Acting now allows us to stay ahead of that curve.”

The state health department hasn’t responded to multiple requests for comment about why it hasn’t updated its card system to protect food benefits for Michigan’s most vulnerable people.

State residents often don’t know their food stamps have been stolen until they’re checking out at a store and their card is declined.

Low-income families have suffered more than $846,856 in stolen benefits so far in fiscal year 2025, CapCon reported in April. In 2023, Michigan charged three Detroiters in a $4 million scheme involving food stamp fraud.

There are at least 10 different ways to commit food stamp fraud: selling benefits to retailers, selling benefits to individuals, reselling food or drinks bought with SNAP benefits, card skimming, phishing, falsifying eligibility information, making multiple applications, retailer application fraud, state agency fraud, and government worker theft, according to the Cato Institute.