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Report on Electronic Benefits Transfer Systems

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Food and Nutrition Service, USDA.


Notice of request for public comment.


The Food and Nutrition Service, Benefit Redemption Division, would like to obtain public comments on specific topics related to initiatives and advances in electronic benefit delivery for the issuance of food stamp benefits. The purpose of obtaining public input on electronic benefits transfer (EBT) systems is to offer State agencies, advocacy groups, food retailers, EBT-system vendors, and other interested parties the opportunity to provide input on EBT issues and initiatives prior to the submission of a report on EBT systems to Congress.


Comments must be received on or before February 24, 2003 to be assured of consideration.


Comments should be submitted to Lizbeth Silbermann, Chief, Electronic Benefit Transfer Branch, Benefit Redemption Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia 22302. Comments may also be datafaxed to the attention of Ms. Silbermann at (703) 305-1863, or by e-mail to All comments will be open for public inspection at the office of the Food and Nutrition Service during regular business hours (8:30 a.m. to 5 p.m., Monday through Friday) at 3101 Park Center Drive, Alexandria, Virginia, Room 403.

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The Farm Security and Rural Investment Act of 2002, Pub. L. 107-171, requires the Secretary of Agriculture to submit a report on EBT systems to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate by October 1, 2003. In an effort to supplement the information that will be provided to Congress with the views of all parties involved with EBT, the Food and Nutrition Service (FNS) is seeking public input through this notice on two general areas of EBT: (1) food stamp EBT initiatives being developed or considered by interested parties, and (2) potential advances in electronic benefit delivery in the next 5 to 10 years, particularly with respect to farmers' markets, fraud identification, and fostering of increased competition among EBT-system vendors.

EBT Initiatives

FNS is seeking information and comments on initiatives and advancements being developed, considered or taken by State agencies, food retailers, EBT-system vendors, client advocates, and other interested parties to address any outstanding issues with respect to EBT systems. Of particular interest are potential advances in electronic benefit delivery in the next 5 to 10 years with respect to the following areas:

1. Farmers' markets—Because farmers' markets and produce stands do not have ready access to phone lines and electricity, the infrastructure for EBT does not exist. Although all farmers have the option to use manual vouchers, it is not the ideal solution because the process is not conducive to the way business is handled at these markets. FNS has been exploring alternatives to manual vouchers to improve operations for these vendors. One option is a scrip system; food stamp clients would use their EBT cards at a central Point of Sale (POS) location in exchange for scrip and then exchange the scrip with individual vendors at the market for food. The second alternative utilizes wireless equipment to authorize food stamp purchases in a market setting. Several States have operated scrip and/or wireless pilots that have been tested. FNS is interested in receiving comments on the pilots and other possible improvements to the way farmers and farmers' markets participate in EBT.

2. Fraud identification—FNS' Anti-fraud Locator of EBT Retailer Transactions (ALERT) Subsystem. ALERT utilizes a file of retailer EBT transactions provided by the States' contracted EBT processors to identify suspicious transaction activity. It assesses and analyzes over 67 million, individual EBT transactions per month. ALERT makes available, on line, a series of reports and queries, as well as the actual transaction data, to assigned Departmental and Agency staff with retailer and compliance monitoring responsibilities. This data triggers further analysis and investigations, which may result in on-site reports, investigations, prosecutions and administrative sanctions. It also enables investigators to track the stores at which a given recipient redeems benefits. Transactions and locations can be further analyzed in terms of overall shopping patterns in all stores. This information is then used to better target investigations or to act on program violators through administrative sanction procedures. FNS is interested in gathering input on possible advances in the increased use of transaction data from EBT systems to identify and prosecute fraud.

3. Fostering increased competition—Due to concern over pricing increases, FNS commissioned a report, the “Electronic Benefits Transfer Alternatives Analysis,” to explore ways to increase competition in the EBT marketplace and keep EBT costs Start Printed Page 78412affordable for all State agencies. The report highlights various procurement and pricing strategies as a way to leverage pricing and obtain economies of scale. FNS is interested in obtaining comments on these and other strategies to further foster increased competition among EBT-system vendors that would ensure cost containment and optimal service.

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Lizbeth Silbermann, Chief, EBT Branch, Benefit Redemption Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Room 403, Alexandria, Virginia 22302, telephone (703) 305-2517.

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Dated: December 13, 2002.

Eric M. Bost,

Under Secretary, Food, Nutrition, and Consumer Services.

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[FR Doc. 02-32434 Filed 12-23-02; 8:45 am]