Watchdog.org stories spark Colorado bill to stop liquor, casino, welfare abuse

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Posted: Mar 05, 2015 5:00 AM
Watchdog.org stories spark Colorado bill to stop liquor, casino, welfare abuse

By Arthur Kane | Watchdog.org

After a series of Watchdog.org stories exposing potential welfare waste, state representatives introduced a bill Wednesday designed to stop or at least decrease the amount of tax money welfare recipients withdraw at state and federally prohibited locations like liquor stories, casinos and strip bars.

The bipartisan bill by state Reps. Tim Dore, R-Elizabeth, and Dan Pabon, D-Denver, would require the Colorado Department of Human Services to regularly report illegal withdrawals to lawmakers and have businesses post a sign near ATMs saying welfare withdrawals are prohibited at their establishments.

Additionally, owners of businesses or ATMs who do not act to stop the abuses could face penalties if their ATMs have multiple violations. The bill does not specify the penalties, but allows the Department of Revenue, which licenses casinos, liquor stores, bars and marijuana establishments, to write rules to prevent the abuses.

Photo Courtesy State Legislature website

FIGHTING FRAUD: State Rep. Tim Dore, R-Elizabeth, introduced a bill that would require ATM owners to help stop welfare abuses at their shops.

“We don’t want this to be about punishment, we want it to be about prevention,” Dore said. “The Department of Revenue as part of its normal inspection will ask, ‘Have you set the machine up to prohibit these cards?'”

The House Bill 1255 attempts to fix abuses uncovered in a series of Watchdog.org stories last year that showed withdrawals at casino, liquor store and strip bar ATMs are still happening despite federal and state law prohibiting the practice. The Watchdog.org series also showed that welfare recipients are withdrawing money at pot shop ATMs and out of state locations like Las Vegas, Hawaii and the Virgin Islands.

The stories, which documented hundreds of thousands of dollars withdrawn in banned locations, also sparked a federal review of whether CDHS is doing enough to stop the abuses.

State officials have known of the illegal withdrawals for years, but have not been able to curb the abuse. The difficulty, according to CDHS officials and ATM experts, is that it’s impossible to block electronic benefit cards at specific ATMs without the owner’s consent. The ATMs are also often moved to different locations so blocking an address would also not solve the problem.

“It’s complicated because often the ATM is not owned by the business, but by an individual franchisee,” Dore said, adding the ATM owner can easily block EBT cards by switching a few lines of code. “This would put the requirement on both of them.”

Photo Courtesy Colorado legislative website

BIPARTISAN CONCERN: House Assistant Majority Leader Dan Pabon, D-Denver, co-sponsored the bill to stop the waste of welfare money that has been documented in Colorado for years.

A separate bill banning ATM withdrawals in pot shops and adult establishments like strip bars, which are not specifically prohibited in state law, is also making its way through the Legislature. Dore said it would complement his legislation by adding those prohibited locations to state law and allowing regulators to write rules.

Senate Bill 65, by state Sen. Vicki Marble, R- Fort Collins, and Rep. Dan Norberg, R-Colorado Springs, passed the Senate last month and is awaiting a hearing in the House Public Health Care and Human Services Committee. A similar proposal failed last year, but Dore believes lawmakers will approve it this year.

CDHS spokeswoman Dee Martinez wrote that CDHS helped convene a group to figure out ways to stop the inappropriate use of the welfare resources.

“The group came to unanimous agreement on a number of key recommendations to prevent improper EBT access,” she wrote in an email response. “House Bill 15-1255 is the result of one of those recommendations – consider policy strategies to sanction repeat consumer and business offenders. We look forward to continuing to work with the General Assembly to ensure that Colorado’s benefits system progressively improves upon its 99% compliance rate.  This Bill will give us the opportunity to enhance enforcement in Colorado through the promulgation of rules. ”

CDHS officials also previously said they are working with their EBT card contractor to see if they can block certain inappropriate purchases.

“CDHS is part of a pilot with JP Morgan to block EBT transactions at (Point of Sale) devices based on merchant category codes,” a spokesman wrote Watchdog.org in an email response last year. “These codes are based on the type of business, so transactions done at prohibited locations would be blocked.”

Dore said if his bill becomes law the waste of taxpayers resources will stop fairly quickly.

“We will get a handle on it so it’s happening at a very small or zero level,” he said. “It will make (ATM withdrawals at prohibited locations) very difficult to do.”