O’Keefe Media Group released an undercover video showing smoke shops and bodegas across New York City processing electronic benefit transfer (EBT) cards for purchases of drugs and alcohol. The video was released on Wednesday and aims to expose alleged misuse of public assistance funds.
The sting, titled “Fraud Is The New Dope,” captured store clerks attempting to use EBT cards to purchase kratom, a psychoactive substance not eligible under SNAP benefits. In some instances, clerks labeled the transaction as “EBT Cash,” while others processed it as “EBT Food,” treating the product as a grocery item.
Federal regulations prohibit the use of SNAP or EBT benefits for non‑food items, including drugs, alcohol, and tobacco. Violations could breach federal SNAP rules, New York State regulations, and the USDA SNAP Retailer Agreement.
A phone inquiry to the number on the back of a New York EBT card confirmed that EBT cannot be used directly to purchase drugs, though cash withdrawals from “EBT Cash” benefits may be spent without restriction. The representative clarified that the cash portion of the benefit is not limited to specific purchases.
The investigation also uncovered a receipt that listed the name and address of an unrelated business. Follow‑up with that business revealed no connection to the smoke shop, suggesting the use of a cloned payment terminal and possible merchant identity fraud.
When confronted, the shop personnel denied the transactions. Shortly thereafter, members of the investigative team were approached outside the store, and one individual issued a threat of violence.
The findings raise concerns about the extent of taxpayer money potentially diverted through fraudulent EBT transactions in the city. Authorities have not yet disclosed any criminal charges, and the investigation may prompt further scrutiny of EBT compliance in retail settings.
