The EBT Scare, Panic, and the Lesson

Over the week­end you no doubt heard about the EBT out­age that bright the sys­tem to a halt.  If you don’t know what EBT is, it means “Elec­tron­ic Ben­e­fits Trans­fer” and is the elec­tron­ic ver­sion of the “Food Stamp Pro­gram.”  So, this means that  instead of receiv­ing paper food stamps and paper checks, you are issued a deb­it card called the EBT Card to pur­chase food prod­ucts and access cash ben­e­fits by your state gov­ern­ment.

All states have sys­tems that use mag­net­ic stripe cards and “on-line” autho­riza­tion of trans­ac­tions. When pay­ing for gro­ceries, the cus­tomer’s card is run through an elec­tron­ic read­er or a point of sale ter­mi­nal (POS), and the recip­i­ent enters the secret PIN to access the food stamp account. Then, elec­tron­i­cal­ly, the proces­sor ver­i­fies the PIN and the account bal­ance, and sends an autho­riza­tion or denial back to the retail­er. The recip­i­en­t’s account is then deb­it­ed for the amount of the pur­chase, and the retail­er’s account is cred­it­ed. No cash mon­ey changes hands. Pay­ment is made to the retail­er through an ACH set­tle­ment process at the end of the busi­ness day. Most states’ online EBT sys­tems are inter­op­er­a­ble through the Quest net­work, which is spon­sored by the Elec­tron­ic Ben­e­fits and Ser­vices Coun­cil (for­mer­ly the EBT Coun­cil) of NACHA.

NACHA is the Nation­al Auto­mat­ed Clear­ing House Asso­ci­a­tion, who man­ages the devel­op­ment, admin­is­tra­tion, and gov­er­nance of the ACH Net­work, the back­bone for the elec­tron­ic move­ment of mon­ey and data in the Unit­ed States. It is fund­ed by the finan­cial insti­tu­tions it gov­erns. The ACH Net­work serves as a net­work for direct con­sumer, busi­ness, and gov­ern­ment pay­ments, and annu­al­ly facil­i­tates bil­lions of pay­ments such as Direct Deposit and Direct Pay­ment. Uti­lized by all types of finan­cial insti­tu­tions, the ACH Net­work is gov­erned by the NACHA Oper­at­ing Rules, a set of rules that guide risk man­age­ment and cre­ate cer­tain­ty for all par­tic­i­pants.

So, in short the Fed­er­al gov­ern­ment pro­vides the net­work for states (and oth­er com­mer­cial insti­tu­tions) to pro­vide for, mon­i­tor, trans­fer, the facil­i­ta­tion of mon­ey to and from con­sumers elec­tron­i­cal­ly.  As we saw this week­end a small por­tion of that sys­tem failed in a big way, leav­ing many gov­ern­ment ben­e­fit recip­i­ents with­out funds to pur­chase food for them­selves and their fam­i­lies.

I’m not going to try to get polit­i­cal here, so bear with that please.  I am going to try to illus­trate how quick­ly the sys­tem failed and how quick­ly “implied” pain and suf­fer­ing kicked in.

Now who was affect­ed?  Food stamp recip­i­ents in 17 states of the Unit­ed states were affect­ed.  More specif­i­cal­ly those who rely on WIC pro­grams and SNAP pro­grams were affect­ed.  Arguably a small por­tion of the sys­tem, yet, a small por­tion of 17 of the 50 states.  The ratio, if you can­not do it in your head is 34% of the states in our coun­try.  And to be hon­est, I have been scour­ing the Inter­net for how many EBT recip­i­ents have been affect­ed by the glitch, main­te­nance, or what­ev­er you want to call it, but I can­not find a num­ber to cor­re­late what a valid num­ber might be.

How­ev­er, pan­ic very quick­ly start­ed to set in.  In USA Today a state­ment was print­ed stat­ing “some gro­cery store cashiers had been spec­u­lat­ing that the fed­er­al gov­ern­men­t’s shut­down caused the prob­lem.” The arti­cle can be found here:  http://goo.gl/rcdvjw.  And word like this quick­ly spread across the twit­ter­sphere, blog­sphere, and across media in gen­er­al until the “real” (some sar­casm implied here as I wear a thin tin foil hat) rea­son was revealed.  Some of the state­ments across the twit­ter­sphere, and there were hundreds/thousands of them, were mak­ing state­ments like this:

• http://suburbansurvivalblog.com/wp-content/uploads/2013/10/EBT_Twitter_Twitchy_Image.png
  • This is a cross sec­tion tak­en from this post on Twitchy.com,
• Twit­ter search for “EBT Down:”  https://twitter.com/search?q=ebt%20down&src=tyah

My point to this, though is not to illus­trate the polit­i­cal rhetoric.  It is to illus­trate the fact that it only took a few hours to put 17 states of EBT Food stamp recip­i­ents into a mild fren­zy or pan­ic, how­ev­er you would like to define it.  It tells me that these peo­ple do not keep more food in the house than what they shop for when they go to the gro­cery store.  Mean­ing, that they do not keep even a 72 hour sup­ply of food for them­selves or their fam­i­lies stored in rota­tion in the event some­thing goes wrong, such as the EBT out­age or oth­er nat­ur­al or man made dis­as­ter.  And make no mis­take, the EBT sys­tem going down is a man made dis­as­ter as would be the ACH sys­tem going down men­tioned ear­li­er in this post.

We could argue that these peo­ple don’t have the mon­ey to keep 72 hours worth of food in their homes for a dis­as­ter, but I humbly dis­agree.  While very low in nutri­tion­al val­ue, one can spend about 30 — 40 dol­lars and feed a fam­i­ly of four for three days with ramen noo­dles, frozen veg­eta­bles, and eggs.  Eggs pro­vide pro­tein, frozen veg­eta­bles pro­vide addi­tion­al vit­a­mins and min­er­als, and the ramen pro­vide both water and car­bo­hy­drates.  That 30 — 40 dol­lars can feed the fam­i­ly three times a day for three days, and keep their stom­ach­es full.  Again, try­ing not to be polit­i­cal, but Skip LaCombe and Doc Thomp­son on The Blaze Radio this morn­ing were talk­ing about how an EBT recip­i­ent bought noth­ing but soda in their cart.  Noth­ing but soda?  How is this essen­tial under EBT for Food Stamps or SNAP. One per­son argued it was cheap­er than water.  Ugh.  (I am veer­ing off to the polit­i­cal, back on track).

Pan­ic…  Now, I am going to change my ver­nac­u­lar a lit­tle bit, and rep­re­sent this a bit dif­fer­ent­ly… The (use your own word here:  zom­bies, sheep, lambs, locusts, etc.), zom­bies start­ed to pan­ic.  They start­ed to get appre­hen­sive.  They start­ed to think they were slight­ed by the sys­tem that was feed­ing them.  I tru­ly feel for those that are uti­liz­ing the sys­tem as a step­ping stone to fix­ing their sit­u­a­tion.  But for those life­time zom­bies that have no inten­tion of mov­ing off the sys­tem that those that are actu­al­ly work­ing are help­ing to feed, I have very lit­tle sym­pa­thy.

Yet, sym­pa­thy or not, the sit­u­a­tion could have been worse…  What if it was a gov­ern­ment fund­ing issue?  What if the gov­ern­ment could not afford to keep the mon­ey rolling to the cards so that those that use the sys­tem could not pur­chase food to feed their fam­i­lies.  Today is Mon­day, Colum­bus Day, Octo­ber 14th, 2013.  It is almost 72 hours from the date and time the sys­tem went down.  What would hap­pen after 72 hours?  What would be hap­pen­ing after a week, two weeks, etc.  Good ques­tion.  I have friends and fam­i­ly that are con­trac­tors to the gov­ern­ment out of work not receiv­ing their pay­checks because they do not have work.  I have fam­i­ly that works for the fed­er­al gov­ern­ment in LEO posi­tions, that are man­dat­ed to work with­out pay.  It’s been 14 days, and they have bills to pay, food to buy, gaso­line to pur­chase, etc.  How does that hap­pen?  Is the gov­ern­ment cre­at­ing zom­bies of their own work­er bees?

I am going out on a limb and not­ing this finan­cial glitch was a warn­ing shot, inten­tion­al or not.  It says that “plas­tic card based cur­ren­cy” is very volatile, and that no mat­ter what the cash is worth, dilut­ed because too much has been print­ed or because it is not backed by any­thing or not, cash is still king until it is used up.  I also wrote about build­ing your own local or group cur­ren­cy as an alter­na­tive to the cur­rent eco­nom­ic sys­tem or oth­er issue, like our EBT glitch takes place.  If you like you can read about it here.

What can one do about this?  It may sound right­eous or self right­eous, but try your best not to become part of the sys­tem.  If you find your­self hav­ing to take part in the sys­tem, try to keep two weeks, at the very least, food stor­age and water for you and your fam­i­ly.  I implore you to keep that as a min­i­mum.  If you bud­get, you can do it.  I know from expe­ri­ence… But that is fod­der for anoth­er blog post.

I’ll leave you with the below video link that illus­trates what hap­pened at a Wal­mart when the cards got tuned back on…

• http://www.ksla.com/category/240198/new-video-landing-page?autoStart=true&topVideoCatNo=default&clipId=9410851 

In con­clu­sion, the zom­bies will pan­ic more quick­ly than 72 hours from an elec­tron­ic dis­as­ter when you take away their mon­ey or abil­i­ty to spend.  To hypoth­e­size, it does­n’t mat­ter if it is the EBT sys­tem or the whole ACH sys­tem is locked down due to a glitch or being shut down… We now know it can and may hap­pen in the future again.  If it does, there is no guar­an­tee the sys­tem will be back up same day, and your mon­ey may be tied up in a dam­aged sys­tem for days, weeks, months, or longer, espe­cial­ly if back­ups do not work as they should dur­ing a restora­tion phase.  The les­son:

• Store food
• Keep cash
• Pre­pare for man made dis­as­ter (includ­ing elec­tron­ic) as well as nat­ur­al dis­as­ter
• Remain on con­di­tion orange for a few days or longer after an event depend­ing on it’s size and scope.  You may not be out of the woods, espe­cial­ly if there was a glitch in an elec­tron­ic sys­tem or plat­form.
• Have a plan

As always, thanks for read­ing!