EBT snafu leads to blame game between Walmart and Xerox

Just who is at fault for the food stamp riot of 2013?

Walmart, where stores in several states experienced Black Friday-like runs on groceries when the electronic benefit cards used by food stamp recipients weren't showing any limits, blames the IT company for the giveaway. Xerox points a finger at Walmart.

Who's right?

The big question is: Who's going to pay for this? EBT money is paid by the state and uses money provided by federal subsidies. The state of Louisiana is most certainly not going to pay for all the stuff that should have been disallowed had the system been working properly on Saturday.

"The outage was the result of failures by our contractor, Xerox," said a spokesman for the Louisiana Department of Children and Family Services. When the system went down, retailers have a phone system for getting authorizations on EBT purchases.

"Some retailers chose not to follow the process," said the rep. "Those businesses are only being reimbursed for the (maximum) amounts on individual cards."

While Xerox admits that its EBT-processing system suffered an outage on Saturday, it points out that Xerox has a "documented process for retailers like Wal-Mart to follow in response to EBT outages," thus putting the blame for the crazy scene back on the nation's largest retailer. And when it comes to questions about paying for all those extra purchases, it refers questions to Walmart.

Meanwhile, Walmart is referring all questions to Xerox.

Maybe they're both hoping that, like a child who ping-pongs between parents who keep deferring to each other, the state will just go to its room and read a comic book.

It looks like it will ultimately be Walmart on the hook for the purchases, as the state says purchases made above a card's available balance will be returned to Walmart marked "as insufficient funds." So the retailer will need to try to squeeze the money for those purchases out of Xerox.

I can tell you from experience that Xerox is right. There is a number to call on the back of the Link card that connects the store to an EBT help line. After giving the customer number the store is informed whether there are sufficient funds to pay for the purchase. (No dollar amount is given, the transaction is only approved or disapproved).

So technically, Xerox is correct. But faced with this situation, you can understand why Walmart and other stores around the country decided to forgo procedure and approve everything:

"Some people had eight or 10 shopping carts full of groceries," said the Police Chief of Springhill, LA. By the time he arrived at his local store at 7 p.m. on Saturday, he says there were hundreds of customers with overflowing carts waiting to check out.

The Chief says he told the manager he had the right to refuse service, but the manager claimed he'd been instructed by Walmart HQ to accept the limitless cards.

A few hours after he arrived on the scene, the glitch was fixed and limits were reinstated.

"When they heard the announcement, people just left their carts in place and walked out of the store," recalls the Chief, who says that police were not needed to disperse the crowd of shoppers.

Walmart HQ was probably getting frantic calls from store managers about a potential riot and in order to protect employees, they made the decision to allow the theft.

They didn't press charges at the time. But they may change their mind once they tote up the damage:

Walmart has not ruled out pressing charges against customers who allegedly attempted to walk out of one of its Mississippi stores with groceries that hadn't been paid for after a computer glitch left them unable to use their food stamp cards.

"We haven't made any type of determination. Our focus continues to be on our customers," Walmart spokeswoman Kayla Whaling said regarding the disturbance Saturday that briefly closed down the Walmart in Philadelphia.

When asked if it was a possibility that the company would file charges, she said, "I wouldn't say that, but, we are continuing to look into the situation."

"We're looking into everything, looking at surveillance video and working with the local police," Whaling said Sunday.

However, Lt. Dan Refre with the Philadelphia Police Department said on Monday that his department is not involved in the investigation and was present only for crowd control. He said police officers were dispatched to Walmart at the manager's request.

Refre said the officers' only role was to "help management get people out of Walmart until they figured out what was going on with their machines."

"There were a few arguments about the food. ... The crowds were getting really large, and they were attempting to leave the store with carts of food that were not paid for," he said.

Walmart is on the hook for all additional charges in Louisiana, say state officials:

A couple of Louisiana Walmart stores will be stuck with most of the bill after food stamp recipients went on a colossal shopping spree when a power outage temporarily lifted their spending limits, state officials said today.

Police were called to Walmart locations in Mansfield, La., and Springhill, La., on Saturday as shoppers cleaned out store shelves.

Springhill Police Chief Will Lynd said some customers were pushing more food than any household could store in a refrigerator and freezer.

"I saw people drag out eight to ten grocery carts," Lynd said. One person hauled away more than $700 worth of groceries, the chief said.

The Louisiana Department of Children and Family Services' spokesman Trey Williams said the retailers who chose not to use the emergency procedures that limit sales up to $50 per cardholder during an emergency would be responsible for any additional amount spent over eligible benefit balances.

Most stores - including other Walmarts - refused to take any EBT cards during the outage. This was probably the safe call. But it isn't just the cartloads of groceries that were stolen. In stores where dozens of full grocery carts were abandoned, spoilage of refigerated or frozen goods becomes a real factor. That's a loss they can't recover from anyone.

As it stands now, unless Walmart will seek to recover at least some of their losses by charging food stamp recipients with retail theft, they're left holding the bag.