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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
cece
November 21, 2012 at 12:52 pm

Food stamps and federal aid is needed for alot these days...But our goverment has alot to do with this. any way, yes I am a believer that if your on aid, if you choose to have more childern then I as a tax payer should not has to pay your way, many many people want more childern, and also do not want to be recieving aid, so we control our lives, money and pride...There should be strong guide lines for recieving aid...believe me many of us just need it in a bad time, not to made a life of recieving it...we need to take care of AMERICANS...not illegals...

simonbirch
November 21, 2012 at 11:39 am

can see why and for all those I am truly sorry....I know I will be run throuh the mill for this, but if you have had one child while on assistance of any kind...why in the world would you have another and another while still on it?? I worry about the children when people can not be responsible enough to be careful. People who make minimum wage still cannot make enough to survive and thats ashame...and should and deserve help...it's just tooo expensive and the system WILL be abused gezzz our own government abuses the power they have to get themselfs raised and opt out of paying social security!!! So it goes both ways and we (govenment) GIVE phones to illegals along with providing a web-site on HOW to get free help??? It is absoulty crazy we give so much away to other nations/illegals and won't help those who are really trying and want to do it on thier own and alot have just given up and I

Jenoun
November 21, 2012 at 11:19 am

Many people have had to go on assistance. It's a fact now days, yes there are hundreds of thousands who seriously abuse the system. Lifers who prefer to have stuff handed to them rather than earn it themselves.

But with that said, there are hundreds of thousands more who live on minimal wages and in certain cases simply do not have the means for higher education, means for a better job or an ability to pursue a higher pay check. It's just how it is. It's not for lack of trying or lack of will power. There simply is no way for them to stand on their own. There's millions who are genuinely disabled physically or mentally and rely on food stamps or cash benefits. These kinds of systems are meant to make things easier on the people who genuinely need it, but unfortunately also makes it even much more simple for those who abuse it to do so without any repercussions.

Don't lump everyone into a single category until you've been there yourself.

I use "you" as a general term, it is not directed at anyone in particular.

TONI
November 21, 2012 at 11:18 am

I think the systems are extremely fragile just think of the damage a solar flare or an electromagnetic pulse could do, not just to banking but to our entire way of life (cars,cellphones, computers of any kind) I love my electronic gadgets but I think we are way too dependent on electronic technology.

Lisa
November 21, 2012 at 11:18 am

I receive benefits but would much rather be working because the benefits do NOT cover my expenses. I'm lucky to have a family that also helps me. I have a very tight budget that I stick to but if the car breaks down or anything in my home breaks the budget gets blown. I agree that everyone should have a buffer zone for times that there is an emergency and you may not be able to access benefits but who are we to judge? What if the only things you have were lost in a hurricane like the one that hit the east coast?

Dwight
November 21, 2012 at 11:17 am

Glitches will occur many times over as we move forward and
depend more and more on electronic debit cards in replace of paper transactions. It is imperative Financial Institutions Nation wide invest more on Cyber Security moving forward.

Michele German
November 21, 2012 at 11:12 am

I believe what Donna has said is spot on. My mom and I stock up on the canned goods and items that may and we believe will, be needed in the future. We do have a survival kit and also we pay with cash or a paper check. I do have paypal and a bank account but just savings, since I need it for my business. But as soon as it's in my savings, which is the only account I have, I take it out that day. At 55 yr.s old, I can't believe that despite of all the glitches we have in own computers at home, how can we trust there wouldn't be any at all in payments and funds that are all run on computer systems. SMH. I may be really old fashioned, but to be honest, I also believe that one day it will be a regret to trust in electronic anything.

katie
November 21, 2012 at 11:08 am

i am from tn...i have 3 children alltogether and one who is autistic...this system is getting extremely ridiculous...rick have you put any consideration into all of the disabled people who rely on food stamps as their ONLY means of having food? How about those with things such as autism where they have to have certain foods at certain times...it may be easy for you and your wife or for those who dont even need the food stamps but receive them anyway to be able to carry on but not everyone can...to me your comment was rude and very inconsiderate. not everyone has just two people living in their home, or has a vehicle to be able to get around. not everyone has the time or the ability to do so. everyone has a different situation they have to deal with in the best way they possibly can. also have you not noticed that the food banks are all running low? they are supposed to be there for emergencies but people like you use them for their own selfish needs or wants... how does it feel knowing you use food banks only so you can store food instead of allowing an entire family who may not even get food stamps at all have a single meal? this system is supposed to be there to help those in need not those who want to abuse it, but how does it help if it is continuously failing? i agree 6 hours should not be too devistating however there is no gaurantee that it will be fixed and running within those 6 hours...would you and your wife like to take care of my family of 5 the next time it happens? yes this is assistance but for most it is there only means. next time think before you respond so people dont take you as being rude and uncaring.

kwillis
November 21, 2012 at 11:01 am

sorry you feel that way rick, for some of us it is.

Donna
November 21, 2012 at 10:59 am

Time to go back to cash only. When your check is electronically deposited go get it out as soon as possible. Request your company send you paper checks because you don't have a bank account.

I believe this is a warning folks. A greater depression than imagined is on the way. It behooves you to have at least a six month supply of food stored in your home. As oil and gas go higher, and they will skyrocket, the cost of food will soar.

Buy your seeds now for next years planting for fresh veggies but get yourself a stockpile of canned foods.

And keep you money in cash. One EMP or "glitch" as they call it and we are all broke. If you can't remember 1929 read about it.