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Chase glitch hits food stamps

By Claes Bell, CFA · Bankrate.com
Tuesday, November 20, 2012
Posted: 3 pm ET

Last week, millions of people had their cards declined at grocery stores across the U.S., thanks to a computer glitch at JPMorgan Chase & Co. The twist? Those cards weren't debit cards or credit cards, they were government benefit cards.

These days, most government benefits from programs like Temporary Assistance for Needy Families, commonly referred to as welfare, or the Supplemental Nutritional Assistance Program, commonly known as food stamps, are loaded on to electronic benefit transfer, or EBT, cards rather than distributed as paper checks or coupons.

If you've ever seen someone use an EBT card or have used one yourself, you know that it looks almost identical to a debit card. Like debit cards, they're swiped at terminals. Users have to enter a PIN. Then, the transaction is processed electronically.

In a lot of states, that last part is handled by Chase, which is contracted by 24 state governments through a subsidiary called JPMorgan Electronic Financial Services to administer the EBT cards.

Unfortunately, a computer glitch at Chase on Friday morning spelled trouble for EBT card users in 10 states, including Florida, New York, Pennsylvania, Georgia, South Carolina, Indiana, Kentucky, Connecticut, West Virginia and Delaware. All told, that meant no access to benefits for about 7 million SNAP beneficiaries in those states.

Mike Feusco, a Chase spokesman, says technical teams began working on the problem as soon as they noticed something was amiss.

"We have technical teams monitoring our programs around the clock," Feusco says. "We caught it as soon as it occurred, and we worked very quickly to resolve it.

Still, it took six hours to resolve the problem, he says.

Feusco was quick to emphasize that the outage was isolated to JPMorgan's EBT systems.

"It did not affect debit, credit or any other cardholders," Feusco said.

Nevertheless, I think it's fair to say the incident underscores the fragility of today's high-tech systems of payment. Cash and checks may be clunky and inconvenient, but their ability to conduct transactions isn't contingent on the smooth functioning of massive networks run by far-off banks of servers.

I'm a big fan of electronic payments, but imagine if something similar to this incident happened to a major bank's payments systems that went down at a particularly bad time, say Black Friday, or suffered an extended outage, rendering debit cards and credit cards useless. Not good.

What do you think? Are today's payment systems too fragile?

Follow me on Twitter: @ClaesBell

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46 Comments
Dave
November 22, 2012 at 1:22 am

It really pisses in my cerealto read some of these post!!!I am 44 and worked all my life until i had a ladder accident on the job.Yes i got a settlement and got a house with the money. I get $45 a month,but if i got more and was on food stamps i should never have a steak.Really people i did not ask for this to happen to me and they do not look at needing home insurance & and alot of other things you need gas car insurance i can go on!! ,,should i have saved my money and moved into goverment housing? Until some see the otherside of life do not judge everybody because of a few!!,,Really judge foodstamps on a steak,,OATMEAL FOREVER,,I lived nice when i could work Know i see when you can not there is alot more than food to worry about when life gives you a turn like it did me !!DEAL WITH IT PEOPLE

Brian
November 21, 2012 at 11:32 pm

People barter with food stamps for items that are not food. The people buying steaks traded cash for food stamps. Usually $10 food stamps for $5 cash. That is what you see when people have their backs against the wall. The rich will not have one ounce of financial compassion.

James
November 21, 2012 at 10:41 pm

A woman in my hometown wrote the goodfellows asking help for a Thanksgiving meal because all her children were grown and left home and so did her income, thats just messed up. IF YOU CANT FEED THEM DONT BREED THEM!

tina
November 21, 2012 at 10:02 pm

My family had food stamps and I never bought steaks. So not everyne on them buys expensive cuts of meat or drives 30000 dollar cars.

cowgirlnc
November 21, 2012 at 9:16 pm

i totally agree with ac1983; too much fraud going on with the welfare system. Many of those using them eat better than my family does. I see alot of steaks, and other expensive meats being bought with them and when you walk outside the store, they're driving a cadillac or something similar. The government needs to cut out the fraud and investigate what's being bought with them since my tax dollars help pay for them!!!

ESTELLA DAVIS
November 21, 2012 at 8:54 pm

I THINK THE WORLD WOULD BE A BETTER PLACE WHEN PEOPLE STOP PLAYING WITH BANK OF AMERICA. THE BANK IS NOT A TOY THAT YOU SHOULD PLAY WITH IT. BANK OF AMERICA SEES YOU COMING WHILE YOU ARE STILL UNDER THE FIG TREE. YOU ARE STILL TRYING TO READ THE BOOK BANK OF AMERICA AUTHORED MANY YEARS AGO IN AMERICA. THE BANK KNOWS YOU INSIDE OUT AND OUTSIDE IN, IN ADDITION TO YOUR MOTHER'S MAIDEN NAMES. STOP PLAYING WITH BANK OF AMERICA. YOU ARE THE OBVIOUS FOOL. I AM NOT YOUR PROBLEM, OBVIOUSLY.