That’s a problem with addiction, not a problem with the cards.
Of course. That way the addict doesn’t have to mug somebody or do a smash-and-grab to get the other $20.
They are not going to kick their habits because you restrict their SNAP cards.
I think the argument is that about the same amount of drugs (or whatever people want) gets bought in any case; the variable is in what’s left over for whatever you think they should be buying.
I can’t imagine the seller is making any money of this, after fees, shipping (with tracking), and more fees from Paypal, you would be lucky to get your $20 back.
It also looks like some of these guys export the bills, if that’ makes a difference.
I know this is more GD, but we’re 25 posts in…
Sorry, but no, not a chance. Anyone using welfare EBT cards to buy things to sell for cash is NOT doing it out of embarrassment, they are doing it to get cash to buy drugs. 100% guaranteed. Any merchant who tried to ‘shame’ someone just for using food stamps would find themselves with a big protest & lawsuit on their hands.
They are literally ‘living high on my money’ because of they are always just buying high-end items to resell at a big discount for quick cash, again, to buy drugs.
No, it’s a problem with the addict. Calling it ‘the addiction’ like its a separate, unrelated entity is politically correct nonsense.
I’m not disputing anything you’ve said here. But that’s because I can’t understand any of it.
Please explain how you (any you) uses/used food stamps to get cigarettes.
Also please explain the idea of somebody doing somebody else’s shopping with food stamps or EBT and how that nets the shopper something at some discounted rate.
Include all the steps and all the participants because I’m real clueless about this stuff. Thanks.
One example:
Joe wants some cigarettes but doesn’t have cash. He does, however, have an EBT card.
Joe goes into a supermarket and buys eligible items with his EBT card with the intent to resell those items at a discount for cash. Joe buys $50 worth of steaks with his EBT card and sells them to Bob for $10 cash.
Joe uses the cash he got from reselling the items in order to buy his cigarettes (or street drugs, or anything otherwise not eligible to be purchases with an EBT card).
In this example, Joe isn’t getting anything at a discount, but Bob is getting steaks at 80% off.
There are other ways involving unscrupulous merchants.
This was my immediate thought as well. I imagine there are some people doing it for the legitimate reasons suggested, but I would think money laundering would be one of the main uses. You steal some credit card numbers and want to cash them out. This is a lot easier than running a money mule operation.
Patch, do you have a link to any of the auctions? I did a quick search, but all I found were people selling rare or collectible currency.
Sorry, no, not guaranteed. They may be, but poor people have more need of cash than those more well-to-do because of the kinds of shopping they do. If you’re getting your car fixed at the shade-tree mechanic who lives down the block, he’s usually going to want cash. If you are buying your household goods at garage sales and the like, they don’t take EBT cards. If you’ve screwed up your bill at the gas company, it’s not that difficult to get into a position where your bill must be paid in person each month at a company agent, and Kansas Gas Service, to name one, has agents who accept cash only. If you can afford to take your car to the dealership, buy all of your towels brand-new at Bed Bath & Beyond, and have your heating bill paid by direct debit from your bank account, you don’t face these kinds of financial constraints, but don’t assume everybody else is in that same position.
(EBT = Electronic Benefits Transfer. That may be food stamps or any other kind of government benefit, including cash assistance, unemployment benefits, etc.)
I don’t know where you live, but I doubt that is true in my neck of the woods. Moreover, it need not be the merchant; other customers in line can be as devastatingly hurtful as the clerk.
Maybe. Or maybe they decided they can have a celebration or special treat once in a while, or maybe they’re just getting a good deal. (Last week at the grocery store, ribeye was substantially cheaper than hamburger, at least until the “manager’s special while supplies last” ran out. Should people using food stamps have been sent away to buy the hamburger anyway, because only those using their own money “deserve” better cuts?)
I’m guessing a lot of people who are buying money are using stolen credit card numbers to pay for it.
But your example isn’t money laundering, it’s credit card fraud. Different things.
Money laundering is when you have a pile of cash from your extra-legal business, but can’t spend it because there are all sorts of things you can’t really buy with cash, at least not without alerting the feds. You can’t walk into a real estate office with a wheelbarrow full of $500,000 in cash to buy a house.
The example from the OP is the opposite of money laundering. You have some form of electronic money, and you convert it to cash. Money laundering is when you take cash and turn it into electronic money.
Ask yourself four questions. #1 Of all the people in the whole world, who is most qualified and has the most accurate information to determine what the welfare recipient actually needs to improve their life? Is it a government bureaucrat? A member of congress? You?. #2 How much overhead is created by writing rules about what can be spent where and putting procedures in place to enforce those rules? One percent? Five percent? #3 How much is wasted by people pulling shenanigans to get cash, like Iggy’s example “Joe wants some cigarettes but doesn’t have cash. He does, however, have an EBT card. Joe goes into a supermarket and buys eligible items with his EBT card with the intent to resell those items at a discount for cash. Joe buys $50 worth of steaks with his EBT card and sells them to Bob for $10 cash.” Do you think two percent is wasted that way? Six percent? #4 How much would be wasted if we just let the recipients decide for themselves how to spend the cash and accept the fact that some of them will make a few bad decisions? If your answers to #2 and #3 added together are roughly the same as #4, then #1 should tell you the tiebreaker.
Getting back to the OP, I can think of a simple example that has happened to me. Your rent is due and you don’t quite have enough cash to cover it. You have a credit card. You could walk into a bank and ask for a cash advance, but that lowers your credit score, plus they charge you a 4% fee. And if it’s a gift card, cash advance doesn’t even work at all. But you need cash to pay the rent.
Getting a cash advance doesn’t lower your score any more than making a purchase of a similar amount would. Credit scores are calculated from the information in your credit report. Banks don’t report cash advances separately from purchases.
The person who charges $24 for a $20 dollar bill is charging you a 20% cash advance fee (plus shipping). The bank is offering a better deal. (Many banks have a $5 or $10 minimum fee, however.) And unless you choose overnight shipping (which will cost you big bucks), you have to plan pretty far in advance to get that $20 bill.
Can’t argue with the gift card.
To be precise money laundering is when you take money that you have no legal explanation for and turn it into money for which you have a plausible explanation and have paid some taxes on. Thus the nail saloon, lazer tag and car wash in breaking bad. All good cash businesses in which its very easy to inflate the actual sales with phantom customers, pay some tax on it and then have legal money you can safely put onto credit cards and into bank accounts.
In the OP, the person money laundering could actually be both selling and buying using multiple fake ebay accounts. He sells $20 on ebay, buys it himself for $24 plus shipping, all of a sudden he’s got $4 of legal income he can explain. Rinse and repeat reselling the same $20 note again back to himself with a different false ebay account. Sure he loses on ebay fees but all forms of money laundering have fees involved. It would be pretty trivially easy to generate scripts to constantly list, bid on and buy new listings, even thousands in one day. And the “no bank acccount or way of getting ebay fund to cash” issue gives a plausible explanation of why his $20 notes are selling.
Got it. Thanks.
I would have thought in that case that Joe could have picked something he could sell at better than an 80% discount to face. After all, although in one sense Joe doesn’t care how much government money he wastes, in another sense he’d sure rather get $60 on the black market than just $10 when selling his $80 purchase. That way he gets 6x as many cigs or booze or reefer or whatever.
In that mileu I figured there’d be a pretty well-established market with lots of Joes & lots of Bobs and prices would converge to not that far below sticker. That may be very naïve of me though.
If they’re really a drug addict they’re not going to wait for the best deal, they’re going to sell their card / stamps as quickly as possible to the first taker in order to get cash.
Drug addicts are not known for their rational thinking or economic frugality and acumen.
Bottles of Liquid Tide laundry detergent have become the street currency of choice.
Now, I don’t think that SNAP benefits can be used to buy Tide, but neither can they be used on eBay. But perhaps other benefits can.
Getting one cash advance may not affect your score at all but I was told by my credit card company, and also by a lender, that getting too many cash advances in too short a time can lower your score or, at the very least, reduce your chances of getting a credit line increase with that particular card. Once when applying for a loan, they asked me if I’d gotten more than two cash advances in the last year.
If you aren’t carrying a balance on the card and you pay it off in full the next month, then yes the cash advance fee is less than the upcharge from our eBay seller. But not if you’re already carrying a balance.
Many credit cards charge a higher interest rate on cash advances, and your payments apply to purchases first and cash advances second. Suppose you already have a $3,000 balance on your credit card, who is charging you 9% interest, and it will take you just over three years to pay it off at $95 per month. Now you get a cash advance for an extra $200, on which the company will charge you 27% interest, plus an $8 cash advance fee. All the payments you make for the next three years will go towards the balance you already owe, and none of it towards the cash advance until the purchases have been paid off. The end result is that you end up owing an additional $473.81 at the end of the three years. But if you’d done it as a purchase for $240 you’d only owe an extra $316.43 at the end of three years.
That changed with the Durbin amendment. By federal law, the bank can apply the amount of your minimum payment any way it chooses. But any amount over the minimum payment must be applied to your highest interest balance first.
The example given was a SNAP recipient who is a cigarette smoker, not “drug addicts… not known for their rational thinking”. For the record, there is no evidence that SNAP recipients use illegal drugs at a higher rate than the general public, and there is considerable evidence suggesting they use illegal drugs at a LOWER rate. The national average rate of drug use is 22% within 1 month, for ages 18-25. National Survey on Drug Use and Health Seven states (Arizona, Kansas, Mississippi, Missouri, Oklahoma, Tennessee, and Utah) have recently required SNAP recipients to take drug tests. Not a single one of them found positive drug tests over 10% and all but one of them were below 1%. http://thinkprogress.org/economy/2015/02/26/3624447/tanf-drug-testing-states/