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Chase glitch hits food stamps

By Claes Bell ·
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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November 21, 2012 at 2:19 pm

Rose. You want to see something shocking. Go over, and just sit sometime in the waiting room at your local SS office and watch and see who it is that's lining up for these various assistance programs ment for our own people. Unless I need new glasses, what I saw was a good number of these foreign workers. Tell me, how is it these newcomers believe they are somehow entitled?

John E. Jones
November 21, 2012 at 2:04 pm

Welcome to the great world of electronics. is it wonderful or what? we live in A gadget world where we`re to lazy to write a check or think for ourselves on anything so we let uncle sam think for us, wipe our noses and give us our handouts. All we have to do is elect the same idiots over&over&all`s right in lemmingville.

November 21, 2012 at 2:01 pm

It’s true, the system is very fragile, But the real question is why? Like this hasn’t happened before… Many of these banks have turned to outsourcing a lot of this stuff to foreign companies where there’s donkeys pulling carts just outside the windows, and where supposed to wonder why there’s glitches from time to time.
The same thing happens with all these H1b Visa workers we have living over here right now; And I’m talking about millions upon millions of these guys. They have credit cards with them, and they are used to help them pay for the food and living expenses while they are state side. These cards are loaded for them over in India by the corporations they work for, whereas the pay little to nothing in fees on the things like they would here in the states.
Are you starting to see what is happening here?
I totally blew a gasket during that third presidential debate, Mitt Romney saying how he was gong to allow these corporations free reign in hiring in scores more of these “highly qualified” foreign workers to come here, plus offering them Green Cards on speed dial so they could stay in this country and continue working for them.
“Here’s the real truth”. America has no shortage in qualified workers. Truth is, many of our highly qualified people are standing in line hoping to find a job and can’t. There’s this little thing, and it’s BIG, it’s called age discrimination.
Corporations are dumping their American workers by the millions, mostly those between the ages of 45-50’s in favor of bringing over the younger foreign worker that’s willing to work for less. While that part may be true, they are not mentioning the perks these workers are receiving, like these preloaded cards, free rent for up to a year or more, rental cars, cards that give them free transportation on of bus and rail systems, automatic discounts on most of the stuff they purchase.
These workers are trained how to do their jobs right here in America by the very corporations hiring them, yet you just try and get them to do the same for a American worker..Ha Ha Ha!!!
We need to start waking up to this stuff in this country and pull the plug on these corporations spinning that same lie to us over and over again, “America ain’t got talent”, America is loaded with talent, but most of it has been put off to the side collecting dust so the corporations can get richer and richer, while America slides further and further down the drain.
Many Americans don’t want to be on all these various assistance programs, They want their jobs back.

Claes Bell
November 21, 2012 at 1:46 pm

Guys, let's keep it civil, please. No need to go all ad hominem on everyone, and let's keep the language PG if we can. Thanks!

Rose Landis
November 21, 2012 at 1:39 pm

Surprise! Democrats and Independents are also against the Breed to Succeed programs that Republicans won't touch either! What country do you live in, John? Obviously not America or you'd no NO party touches those sacred cows. Republicans want to eliminate "entitlements" like Social Security and Medicare. These are BENEFITS people worked decades for. WORKED FOR. Not Breed to Succeed "Befits" that ARE entitlements. There is no incentive to work in America any longer... Kids learn that you can be a drunk and/or a druggie and you get free food, housing, medical, everything at someone else's expense. And Republicans are just as responsible as any other party.

November 21, 2012 at 1:37 pm

If a bank is a service provider as Chase is, they deserve to be paid for that service. No one works for free and you are stupid if you think they should. It's called free enterprise which makes this country great.

Gerald Borbey
November 21, 2012 at 1:26 pm


There are just as many DEMOs making money off the system as there are republs.

John Husty
November 21, 2012 at 1:22 pm

Typical Liberal comment. Repubs are NOT against food stamps. What repubs are against is people who misuse the system, do drugs, remain in the system way too long, and don't buy good foods with the stamps they get. You watch way too much MSNBC. And the bank was solicited for the government bid on this. The government accepted the bid. So, any referral to the bank, must be addressed to the government administration in power. Jus tbecause I am a doctor and I see a medicaid patient, doesnt make me a bad person or a republican. Get a life.

Amie King
November 21, 2012 at 1:16 pm

You are SO right Maryann and I was thinking the exact same thing. It's ridiculous that we allow banks to profit from such government programs. As if they don't pillage the American people enough already....

Maryann Davidson
November 21, 2012 at 1:05 pm

Electronic anything will always have some glitches. So sorry for all of the people that were affected by this glitch.
What I find interesting is that all (or at least most) Republicans are against food stamps and other hand outs by governmental agencies. However the banks do not mind at all making money on the governmental electronic payments. So the payments to needy individuals also makes a lot of money for many Republicans. Of course before you say it I realize that there are chiselers in the system too. However, rich power people are raking in big money from milking the system. The pot that called the kettle black!!!