Oversight committee hears OIG and vendor on converting Bridge Cards to chip technology to curb EBT fraud

The Oversight Committee on State and Local Public Assistance Programs heard presentations from the Michigan Department of Health and Human Services Office of Inspector General (OIG) and vendor Conduent on converting Bridge Cards to chip-enabled cards and other steps to reduce Electronic Benefit Transfer (EBT) fraud.

Committee Chair Wolford opened the session by saying the panel was "committed to stop the fraud in Michigan," and then invited OIG staff to present. Andrew Kostowski, director of the OIG's Special Investigations Division, and Jennifer Allen, manager of the OIG's Benefit Trafficking Investigation Section, outlined recent investigative results and recommended technology and operational changes to limit fraudulent use of Bridge Cards.

The OIG told the committee Michigan averages "nearly 1,400,000 FAP recipients and $250,000,000 in FAP benefits paid out monthly." Investigators said criminals have used skimmers and shimmers on point-of-sale terminals to copy magnetic-stripe EBT data and produce counterfeit cards. The OIG reported it had detected and led to confiscation of 44 skimmers at Michigan retailers, safeguarded more than 76,000 Bridge Card accounts and over $16,600,000 in food stamp funds, and recorded a $305,000,000 impact through fraud detection, avoidance and disqualifications in the prior year.

Kostowski described investigative techniques and remedies OIG uses: geolocation and shopping-pattern analytics to locate likely skimmer placements, identifying terminals that used unauthorized FNS numbers to process transactions, coordinating PIN resets for potentially compromised accounts, and executing search warrants at locations tied to fraudulent activity. He said OIG had recommended changes to USDA processes because third-party processors can be misled by false merchant FNS numbers.

Jamie Topolski, director of government payment products for Conduent, presented vendor perspectives on technical mitigations and rollout considerations. Topolski and Conduent fraud lead Chris Carter explained that migrating EBT cards from magnetic stripe to EMV (chip) cards substantially reduces the ability to create counterfeit cards because chip transactions use a unique cryptographic code per transaction. Topolski said, "the presence of the chip really does cut down significantly on counterfeit card fraud." Conduent referenced industry data showing counterfeit-card fraud fell substantially after a large portion of the retail ecosystem and card portfolios migrated to chip technology.

Conduent recommended a package of complementary measures: issuing EMV chip cards, adding a three-digit security code on the card back to reduce online fraud, encouraging secure PIN choices and PIN resets when cards are reissued, transaction notifications and an easy card-lock feature for recipients, stronger IVR call-scoring to block fraudulent phone attempts, and more proactive blocking of suspicious terminals or of transactions in high-risk geographies. Conduent warned that "digital provisioning" (adding a card to a mobile wallet) carries provisioning risk because it is harder to verify the phone receiving the credential than a mailed physical card.

On costs and timing, Conduent said adding chips and the required back-end changes is not inexpensive and described the work as a "multimillion dollar project"; the vendor estimated the per-card cost could be several dollars but did not provide a precise statewide estimate in the hearing. Conduent added that most retailers that already accept chip cards would only need a software update to handle EMV EBT cards; replacing physical terminals is generally not required.

During Q&A, representatives pressed on likely fraud reduction and logistics. Kostowski said OIG has no single-figure estimate for total undetected fraud but emphasized prevention is more effective than a purely investigative "pay-and-chase" model. Topolski suggested two near-term priorities: broad adoption of an account lock/unlock flow (including scheduled automatic relock) to reduce losses quickly, and a longer-term shift to EMV cards to eliminate counterfeit-card and skimming vulnerabilities.

Why it matters: witnesses tied the issue to taxpayer protection and recipient safety, noting large sums flow through the EBT system monthly and organized groups are exploiting weak points in magnetic-stripe technology. Converting Bridge Cards and strengthening detection and terminal controls would require coordination across MDHHS, federal Food and Nutrition Service (FNS) rules, processors, retailers and vendors.

The committee did not take a formal vote on policy changes at the hearing; presenters said additional technical, contractual and regulatory steps remain to be defined and costed before a statewide conversion.

Ending: Committee members thanked OIG and Conduent for the briefing and said they would continue oversight work; the meeting then moved to a separate witness who provided personal testimony about harm connected to Bridge Card misuse.