You get food stamps, Social Security, or VA disability benefits because you need them. That's exactly what makes you a target. Criminals and predatory lenders have learned that government benefits arrive on a predictable schedule, direct-deposit into a traceable account, and come with recipients who often have few other financial options. The result is an entire ecosystem designed to take that money back out of your pocket.
This isn't abstract. Criminals stole an estimated $349 million in food benefits in just the first half of 2025. Veterans are being charged tens of thousands of dollars for disability claims help that is legally supposed to be free. Social Security recipients on fixed incomes are being handed payday loans with interest rates above 300%. Each of these is a different scheme, but the logic is the same: find people with a guaranteed income stream and take a cut of it.
Here's what each of the major schemes looks like, who runs them, and what you can do about it.
Your EBT card is being skimmed at checkout
This is how it works: criminals attach a small, nearly invisible device over the card reader at a grocery store checkout or ATM. When you swipe your EBT card, that device copies your card number. A tiny camera or fake keypad overlay captures your PIN as you type it. Within hours, someone on the other end has cloned your card and is spending your food benefits at a store in another state.
Criminals time their withdrawals around monthly benefit deposits because they know exactly when the money will arrive. EBT cards still run on the same magnetic stripe technology as older credit and debit cards, which makes them far easier to skim than chip cards. Most states are only now starting to upgrade. California made the switch in 2025 and reported an 83% drop in skimming losses after doing so. For recipients in the many states still on magnetic stripe cards, the vulnerability remains.
Change your PIN the day before your benefits are deposited each month. That way, even if your old PIN was captured by a skimmer, it won't work. Cover the keypad with your hand every single time you enter it. If a card reader feels loose, looks different from the others in the store, or has any part that seems like it could be peeled away, don't use it. You can also freeze your EBT card when you're not actively shopping through your state's EBT app or cardholder portal. Freezing the card blocks purchases and PIN changes until you unfreeze it yourself.
One critical piece: as of December 20, 2024, federal authority to replace stolen SNAP benefits ended. Some states have their own replacement programs, but many don't. If your benefits are stolen today, you may not get them back. That makes prevention the only real protection.
Payday lenders specifically recruit people on Social Security
If you receive Social Security by direct deposit, you are a preferred customer for certain payday lenders. That's not a guess. Lenders openly market to Social Security recipients, and some set minimum monthly benefit income as a qualification threshold. The pitch is that a direct-deposit government check is reliable, predictable collateral. What they don't lead with is what it costs.
A typical two-week payday loan carries an annual percentage rate of around 391%. If you borrow $300 and can't pay it back in full on your next payment date, you roll it over and pay the fee again. Then again. The Consumer Financial Protection Bureau has found that more than 80% of payday loans are reborrowed, with nearly one in four taken out nine or more times by the same person. For someone living on a fixed monthly income of $1,500, a $300 emergency loan can turn into a months-long drain that leaves them worse off after every cycle.
There is an additional hazard specific to Supplemental Security Income recipients. SSI has strict income limits, and a payday loan disbursement can count as income in the month you receive it. Depending on the amount and your state's rules, this could push you over the SSI threshold and cost you that month's benefits entirely, meaning the loan meant to cover a gap ends up eliminating the benefit it was supposed to supplement.
Credit unions often offer Payday Alternative Loans (PALs) with APRs capped at 28%. Still not cheap, but a fraction of a payday lender's rate. Local nonprofits, community action agencies, and utility assistance programs also provide emergency help that doesn't need to be repaid. If you're facing a short-term cash crunch, exhausting those options first is worth the extra call.
Veterans are being billed thousands for help that's legally free
Filing for VA disability benefits is slow and confusing. An entire industry has grown up offering to navigate it for you, for a fee. The problem is that federal law prohibits charging veterans to prepare their initial VA disability claims. The service is supposed to be free, provided by nonprofit veterans service organizations like the VFW and American Legion, as well as county veterans service officers.
For-profit companies called “claim sharks” operate in a legal grey area created when Congress removed criminal penalties from the relevant statute in 2006. Without meaningful enforcement, they've grown into a multibillion-dollar business. The VA has sent cease-and-desist letters to more than 40 companies over the past decade warning them to stop charging illegal fees. At least 29 of those companies are still operating. An investigation by NPR and The War Horse found one company using an automated phone system to dial the VA benefits hotline, enter veterans' Social Security numbers, check for disability rating increases, and immediately send veterans a bill, including in cases where the company hadn't done any meaningful work on the claim.
The charges are not small. Some companies charge five times a veteran's monthly disability rate increase as their fee, which can exceed $20,000 in a single bill. One veteran paid $12,000 to a claims consulting firm. Another received a $5,500 invoice after being approved for $1,100 per month in benefits.
If you're a veteran working on a disability claim, you don't need to pay anyone. Free, accredited claims assistance is available through the VFW, American Legion, Disabled American Veterans, and your county veterans service office. If a company asks you to sign a contract, pay any upfront fee, or provide your Social Security number in exchange for help with a VA claim, that's the signal to walk away.
Pension advances are high-cost loans with a different name
A “pension advance”, also marketed as a “pension buyout” or “pension loan”, offers you a lump sum today in exchange for handing over a portion of your future pension or disability payments for the next several years. The product is pitched as a financial tool for people who need cash now. It works like an extremely expensive loan.
Interest rates on pension advances typically run from 27% to 106%, and some products are structured so that the lender receives your pension deposit directly into an account they control. Federal law prohibits veterans from assigning their benefits to third parties, so the companies marketing these products use careful language to avoid calling them loans. That doesn't change what they are. In early 2024, the CFPB distributed nearly $6 million to veterans harmed by exactly these schemes.
The red flags are consistent: a company encouraging you to open a new bank account specifically for the transaction, asking you to take out a life insurance policy naming them as beneficiary, or offering a lump sum that is significantly less than the total payments you'd be giving up. People with government pensions are a favorite target because the income is guaranteed. Before signing anything that touches your pension or disability payments, take it to a nonprofit financial counselor or veterans service organization first. If the arrangement requires redirecting your direct deposit, stop there.
Phishing calls and texts are designed to sound urgent
A second wave of benefit theft happens by phone and text. Scammers impersonate government agencies, sometimes claiming your EBT account has been locked, sometimes warning that your Social Security number was used in a crime, sometimes threatening that your benefits will be suspended unless you verify your information immediately. The goal in every case is the same: get you to hand over your card number, PIN, or Social Security number voluntarily.
Government agencies and EBT processors do not call or text asking for your PIN. They will not ask you to confirm your card number over the phone. They will not tell you to buy gift cards to protect your account or clear a hold on your benefits. Your state's EBT office will never ask for your PIN under any circumstances. If a text or call arrives claiming to be official and asking for any of that information, assume it isn't.
If you've already given out your card information, call the number on the back of your EBT card immediately, change your PIN, and freeze the card. Report the scam to the FTC at ReportFraud.ftc.gov. Speed matters. Benefit thieves typically drain accounts within hours of getting the information they need.
Every one of these schemes works the same way at its core: it finds people with a predictable, reliable income and builds a mechanism to redirect some of it. Knowing the mechanics is most of the defense.
More benefits advice and news from Wealthy Single Mommy:
Legit single mom hardship grants — This is an updated list of dozens legitimate hardship grants for single mothers — from private charities, businesses and individual donors.
SNAP in 2026: New max benefits, rule changes, and the exact moves to raise your payout — For the 2026 fiscal year, the caps go up in most places, deduction amounts change, and other changes affect how much you receive. Below you’ll find the new numbers in plain English, a quick way to estimate your own benefit, and how to maximize your sum.
7 surprising EBT benefits — If you receive EBT card benefits you can qualify for more than free groceries and other essential items. In this post, you'll find places to go for EBT card holders, including free entrance, discounts and other free stuff.
