OMG has captured multiple New York City bodegas and smoke shops accepting Electronic Benefit Transfer (EBT) cards for the purchase of Kratom, a substance ineligible for SNAP benefits.
Kratom, derived from a Southeast Asian tree, acts as a stimulant in low doses and produces opioid-like sedative effects in higher doses. It is commonly sold as powder, capsules, or liquid extracts. Federal regulations strictly limit SNAP and EBT benefits to eligible food items. Under 7 CFR 278 and 7 U.S. Code 2012, retailers are prohibited from accepting these benefits for non-food products, including drugs, alcohol, and tobacco. Violations can result in store disqualification and fines.
Our undercover journalists visited several locations, and in multiple cases, clerks attempted to process Kratom purchases using EBT cards, sometimes selecting “EBT food” and other times “EBT cash.” At one store, a clerk confirmed the transaction after the undercover journalist specified payment by EBT card. At another, the clerk rang up a liquid Kratom product as EBT cash, a method described in the investigation as a common workaround to avoid system flags that reject non-food items under the food designation.
A call to the number on the back of an NY EBT card produced further clarification. A representative stated that EBT cards cannot be used to purchase any drugs. However, the same representative acknowledged that once cash is withdrawn from an EBT account via an ATM or terminal, the funds can be spent without restriction.
At one convenience store, our undercover journalists obtained a receipt listing the purchase as “EBT food.” The address and business name on the receipt did not match the store. We discovered that the legitimate business was unaware its credentials were being used. This is consistent with the use of a cloned terminal, potentially involving transaction laundering or merchant identity fraud under 18 U.S.C. 1343.
When confronted, store employees denied processing the transactions. One location closed its door on our undercover journalists. Our investigation notes that even the attempt to accept SNAP benefits for ineligible items constitutes a crime under New York Penal Law.
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