Why new consumer protection agency rule must include EBT account holders


January 19, 2023

It began, in part and strangely enough, with a banana. 

Entrepreneur Jimmy Chen hoped to develop software that would make it easier for people with low incomes to apply for SNAP benefits. While conducting research and interviews and studying how poor people shop, he noticed people buying one very cheap item – often a banana – so that they could find out their Electronic Benefits Transfer (EBT) balance, which was printed on their receipt.  

Eventually, Chen’s company, Propel, developed an app called Providers that would allow EBT recipients to easily check their balances. Technically, under the current system, any EBT account holder can do so, but access is not guaranteed by law, systems are clunky and vary state to state, and people whose internet access is limited to mobile phones – which includes a lot of people with low incomes – are severely disadvantaged, as it is harder for them to access their accounts.  

Chen says users of the Providers app check their balances, on average, 17 times a month; one user, Andrea Young of Charlotte, North Carolina, says she checks it more than that. “I check it all day, every day,” she told the New York Times. “It makes me feel reassured, knowing I am going to have food.”  

In the past, Young said, she only learned when reaching the check-out register that she had run out of EBT funds. She said pulling items out of her shopping cart while others watched “makes you feel like you’re just pitiful.”  

Access to one’s EBT account may seem like a simple matter – and, technology-wise, experts say it should be. But it is a stark example of how recipients of certain government benefits are often treated like second-class citizens when it comes to one’s personal, financial data. 

And now, advocates for people with low incomes are doing something about it.  

Back in 2010, Congress passed the Dodd-Frank law, which created the Consumer Financial Protection Bureau (CFPB) and, among other things, stated that consumers were in charge of their financial data. More than 13 years later, CFPB is using its rulemaking authority to define exactly what that means and who is covered.  

The bad news is that a draft CFPB rule excludes EBT accounts. This approach is based on the same regulatory carve-out that denies protection for people whose benefits are stolen through hacking or card skimming. 

The good news is that CFPB is asking the public for feedback on whether households with low incomes who use EBT accounts should get the same access, rights, and consumer protections as recipients of other financial products. Individuals and organizations have until Wednesday, January 25 to submit comments to the federal agency.  

Advocates, including Chen’s Propel and Prosperity Now, are circulating a customizable letter template as part of an effort to encourage and assist others who may want to comment. You can view the template here.  

The letter states that “Programs like the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance to Needy Families (TANF) serve the most vulnerable in our country – people who deserve access to their financial data and robust consumer protections to protect them from unfair, deceptive, and abusive practices.”  

Unlike bank-issued debit cards, the letter states, EBT account holders who are victims of theft through “card skimming and cloning” have long been ineligible to receive reimbursement, unless they reside in California or Washington, D.C., where TANF funds are eligible for state reimbursement. “Congress recently took action to temporarily give the USDA the authority to provide reimbursement to EBT account holders in response to a troubling national spike in benefits theft,” the letter states. “Regardless of the Congressional response, data access is an essential tool to empower low-income consumers who rely on public benefits to monitor their accounts for suspicious activity and protect themselves from theft.”  

The letter applauds CFPB’s effort to advance data rights and consumer protections but expressed concern “that the proposal as it now stands unfairly excludes low-income Americans, and establishes a more robust set of rights and protections for those with higher incomes. The Bureau should work to ensure a single class of treatment for all Americans by extending coverage of the proposed rule to include providers of government benefit accounts used to distribute needs-based benefits programs.”  

Part of the purpose behind the proposed rule is to encourage competition among third-parties to improve access to data. The change that advocates are seeking to the proposed rule is to encourage competition from companies like Propel to improve services for EBT account holders too. More competition, the thinking goes, means better service and innovation – which in turn means government programs that do a better job of meeting people’s needs.  

“We pay hundreds of billions of dollars to fund these programs,” Chen told the New York Times. “Why not make them work well?”  

Consumer Financial Protection Bureau