SAN FRANCISCO - A national consumer group is weighing on California state officials to negotiate more "user-friendly" terms in a pending electronic benefit transfer contract with Citigroup Inc., which has been sharply criticized in the past for its EBT services in other states.
A major concern among consumer advocacy groups and those representing the state's low-income communities is that California will agree to an EBT program that would actually make it more difficult and more expensive for recipients of welfare and other benefits recipients to receive these benefits electronically than through traditional routes such as checks or food stamps.
In a report released Tuesday, a regional office of New York-based Consumers Union draws on the EBT experiences of 10 other EBT states to show how California can avoid difficulties faced by benefit recipients in other states elsewhere.
States are under a federal mandate to set up an operating EBT program by October 2002 that will allow people to receiving receive food stamp benefits to access them electronically by using a service similar to a bank debit card.
And since California will be one of the last states to implement a benefits transfer EBT program, consumer advocates are keeping a close watch on how it handles this vendor contract.
"EBT could be an advantage to benefits recipients because it's a gateway to the financial mainstream," said Debra Garcia, a policy analyst with the West Coast regional office of Consumers Union.
"The biggest concern is access to free cash," said Ms. Garcia.
In California, the spotlight will be on Citigroup's Citicorp Services Inc., which the state picked earlier this month as a vendor, according to Consumers Union. A contract is expected to be signed in November.
Citigroup has the dominant market share in this field, acting as the vendor to EBT systems in over 29 states. But the nation's largest banking company came under fire last year after a report in The New York Times detailed how fees and delays have hampered users' access to users of New York's benefits EBT program, which is also run by Citigroup.
Citigroup spokeswoman Susan Weeks would not comment on any contract negotiations with California and referred calls to the state; California officials did not return calls by deadline.
Ms. Garcia said New York's situation "showed that [the state of California] needs to have very detailed provisions in the contract," Ms. Garcia said.
California will distribute about $1.6 billion of food stamps every year under its EBT program, according to Consumers Union. The state's counties will also be able to choose whether to have the option of using EBT cards to distribute temporary assistance, or CalWorks, checks and other public assistance benefits. Participation in this part of the EBT benefits program would involve up to $3.3 billion of annual cash benefits, Consumers Union estimates.
The state's invitation to partner, similar to a corporation's request for proposals, for the benefits transfer EBT program, has already laid out the groundwork on ATM access. It says that a vendor must allow four free withdrawals every month, at designated locations.
Community organizations are also concerned that the vendor for California's EBT program provide food merchants that currently take food stamps with the technology to accept EBT cards instead.
Now Consumer groups are lobbying the state to make sure it sticks to the terms of the ITP invitation to partner and makes sure these ATMs are at convenient locations for food stamp and public assistance recipients. "People should not have to go out of the way to get these benefits, like to another part of town," Ms. Garcia said.