Undercover Probe Puts EBT Oversight in the Spotlight

Undercover video from New York City smoke shops is raising new alarms that taxpayer-funded EBT cards may be helping fuel street drugs and alcohol instead of feeding families.

Story Snapshot

Undercover footage shows clerks trying to run kratom and other items through Electronic Benefit Transfer (EBT) systems as “EBT cash” or “EBT food.”
The same investigation highlights a call with an EBT help line where a representative says once cash is withdrawn, people can spend it however they want, even on drugs or alcohol.
Federal and New York rules clearly ban using food benefits to buy alcohol, drugs, tobacco, or other non-food items, yet similar fraud cases have already led to major prosecutions.
Separate government crackdowns in New York City show a wider pattern of EBT abuse, including card-skimming schemes at bodegas that steal millions from low-income families.

What The Undercover Video Claims To Show

O’Keefe Media Group released undercover footage that they say was recorded inside smoke shops and bodegas across New York City. Their stated goal was simple: find out if retailers would accept government-funded EBT benefits to pay for drugs or alcohol instead of food. In the clips, clerks appear to try to ring up kratom, a psychoactive herbal product, under “EBT cash” or “EBT food” categories on the payment terminal. The narration says store workers were “swiping the EBT card for illicit substances” across several locations, suggesting a pattern, not a single mistake.

The video also shows a receipt from one smoke shop that allegedly lists the name and address of a different business. The producers say they later visited the business printed on the slip, and employees there denied any link to the smoke shop. They argue this mismatch points to deeper problems, such as cloned payment terminals or fake merchant identities that could hide fraud. However, the footage itself does not include back-end transaction data or forensic device tests, so the claim of cloning remains an allegation, not proven fact.

What The Law Says About EBT And SNAP Purchases

Electronic Benefit Transfer cards carry two very different types of benefits: food aid under the Supplemental Nutrition Assistance Program (SNAP) and cash assistance. Federal rules in Title 7 of the Code of Federal Regulations and the United States Code are clear that SNAP food benefits cannot be used to buy non-food items. That includes alcohol, tobacco, hot prepared foods, and drugs, which are all explicitly banned as eligible SNAP purchases. New York State tax and social-service rules match this line, and retailers sign agreements promising to follow these limits when they accept EBT cards.

The undercover video itself recognizes one important legal detail. In a recorded call to the number on the back of a New York EBT card, a customer-service representative reportedly confirms that people cannot buy drugs directly with their EBT cards. But the same representative adds that once someone uses “EBT cash benefits” at an automated teller machine and withdraws cash, they can then spend that cash however they choose, including on drugs or alcohol. That comment points to a gray area: the system bans using food benefits for illegal or non-food purchases, yet cash assistance, once withdrawn, becomes nearly impossible for the government to track in real time.

How Much Of This Is Proven Fraud Versus Alleged Misuse

One key limit with the new video is that it shows edited undercover scenes, not full, uncut recordings or official case files. The producers say their main objective was to show clerks willing to attempt these transactions, not to prove that every sale was fully processed and settled as SNAP food purchases. There is no public evidence yet of enforcement actions or court cases naming the specific smoke shops in the clip. That gap makes it harder to say whether what viewers see is routine criminal fraud, isolated staff misconduct, or failed attempts that never fully went through.

The caution is not new. In an earlier case involving the community group ACORN, an undercover video by the same journalist led to major public outrage, but later review told a different story. The Brooklyn District Attorney examined the unedited tapes from that ACORN sting and concluded the clips had been “heavily edited” and did not prove criminal wrongdoing. That history does not disprove the current New York City smoke shop footage, but it does explain why some people, across the political spectrum, now ask to see raw files and hard records before accepting edited undercover videos as final proof.

Documented EBT Fraud Shows A Broader Problem

While the exact behavior in this new video has not yet been tested in court, other EBT fraud in New York is well documented and serious. In 2022, federal prosecutors in Brooklyn charged two defendants with misusing about $20 million in SNAP benefits at a bodega. Prosecutors said the store operators let cardholders trade SNAP benefits for cash or non-eligible goods like beer and then kept a cut, a form of trafficking that clearly breaks federal rules. In another case upstate, Albany merchants were accused of a $1.5 million scheme that also involved selling alcohol and cigarettes and giving cash back in exchange for food benefits.

On top of merchant trafficking, New York City has become a hotspot for card-skimming scams that hit poor families directly. Reports from the Secret Service and local media describe bodegas using hidden devices on checkout terminals to steal EBT card numbers and personal identification numbers from unsuspecting customers. The stolen data is then used to make fake cards and drain SNAP accounts, costing families and banks huge sums. One recent operation by the Secret Service in New York uncovered at least 35 illegal skimming devices and stopped an estimated $36.5 million in fraud across several boroughs.

Why This Matters To People Across The Political Spectrum

For many Americans, both conservative and liberal, this story hits a raw nerve. People see a system that is supposed to help poor families buy food but instead keeps getting twisted by scammers, careless officials, and sometimes the very retailers trusted to serve local communities. Conservatives point to waste, fraud, and abuse as proof that huge government programs often fail the working taxpayer. Liberals worry that every dollar stolen from SNAP or EBT means a child goes without meals while well-connected crooks and corrupt store owners profit.

In New York, government agencies now warn residents to check terminals for loose keypads, freeze cards between purchases, and change PINs often to fight skimming. City hotlines invite people to report when EBT cards are sold for drugs or cash, or when stores buy benefits for prohibited items. Yet despite raids, arrests, and warnings, large-scale fraud keeps surfacing. That pattern feeds a deeper sense that the “system” protects itself first and fixes problems slowly, while taxpayers and poor families absorb the damage. The latest undercover video, whether fully verified or not, taps into that shared frustration and renews calls for real oversight, transparent data, and simple rules that are enforced fairly on everyone.