By CHRISTOPHER BUTLER
Recipients of EBT cards in Chattanooga and Knoxville used their benefits at a strip club, a bar, a tobacco shop, malls, high-end clothing stores, hotels and other places where non-essential items are sold.
As it did with EBT transactions in Memphis, Tennessee Watchdog accessed state records and examined almost 22,000 EBT purchases in Chattanooga and Knoxville. These transactions took place in June 2012.
Of the transactions (available for viewing here), 13,566 took place in Knoxville, while 8,424 occurred in Chattanooga.
As was the case in Memphis, most of the transactions occurred at grocery stores— but a small number of transactions were at businesses that do not specialize in selling essential items.
An EBT can offer two different types of benefits — the first being food products, commonly known as food stamps, and the second deriving from the Federal Temporary Assistance for Needy Families Program (TANF). Unlike food stamps, which are limited to certain food and related purchases, families on assistance through TANF receive as much as $500 per month in cash benefits and use them as they see fit.
According to state records, recipients of government assistance in Knoxville made the following transactions with their EBT cards in June:
• On June 2, one or more people used an EBT card to make three separate transactions, amounting to a sum of $64, at the Th’Katch Show Club (listed as the Blue Room on the transaction form). Attempts to reach management of the Th’Katch Show Club were unsuccessful. According to online information from a variety of web sites, the club specializes in nude lap dances, as well as beer and wine sales.
• On June 12, transactions of almost $30 took place at Discount Tobacco. Tennessee Watchdog made a variety of attempts to contact the owner, but store employees said that he was unavailable for comment.
• Customers used EBT cards to make $1,212 in transactions at the Knoxville Center Mall and $402 at the West Town Mall.
The Indiana-based Simon Property Group operates both malls. Tennessee Watchdog found similar transactions earlier this year at the Wolfchase Galleria Mall in Memphis, which Simon also operates. When asked about Simon’s policy on accepting EBT cards, spokeswoman Lexi Harris said the following: “The decision to accept EBT cards would rest in the policies of the individual retailer and not the mall.”
• On June 12, a customer used an EBT card to purchase $242 of merchandise at a Knoxville Dillards.
• Customers also used their EBT cards to make transactions at a Little Caesars pizza restaurant and Papa Murphys. A Little Caesars’ representative was unavailable for comment. Meanwhile, Papa Murphy’s spokeswoman Lindsay Taylor said the restaurant has always accepted EBT cards.
• A customer made a $24 EBT transaction at the Royal Inn and Suites. Owner Don Patel told Tennessee Watchdog that his hotel does not accept EBT as payment.
• A Super 8 Hotel in Knoxville accepted a $182 EBT transaction from a customer on June 1. Super 8 spokesman Rob Myers said each hotel is independently owned and operated and payment policies vary from one hotel to the next.
• An EBT recipient used his or her card to make a $102 transaction at the US Cellular Complex in Knoxville. Tennessee Watchdog was still awaiting comment from a US Cellular spokesperson at the time of publication.
• Customers used their EBT cards to make a sum total of $239 worth of transactions at United States Postal Service (USPS) offices throughout Knoxville. USPS spokesman David Walton told Tennessee Watchdog in July that the government agency does not accept EBT cards.
• EBT recipients made $68.52 worth of purchases at a Chattanooga AutoZone. Attempts to reach an AutoZone representative for comment were unsuccessful.
• The owner of Beauty World, a beauty supply store, hung up when Tennessee Watchdog asked during a telephone interview what his store’s policy is on accepting EBT cards. Records show that $14.81 was spent at the store using an EBT card.
• An EBT recipient made two transactions at the Chattanooga Convention Center on June 3 and 4, both totaling $206. Convention Center Executive Director Mike Shuford said the transactions happened at the Center’s ATM machine, according to his records.
“If you are an individual coming into this building there is nothing that you would spend here for $100, unless it was from an ATM machine. We would never have more than a $100 charge. We don’t do credit cards at concessions or bars.”
(In July, Tennessee Watchdog asked John Taylor, an account executive with the Memphis-based ATM Central Transactions, how a cash withdrawal from an ATM machine would appear on a financial statement. Would an ATM withdrawal appear as a transaction at the business that houses the ATM or would it simply list the withdrawal as coming from an ATM only?
“It’s likely that this is not a case of people simply withdrawing money from an ATM machine in front of or inside a business. As it would on a bank statement, an ATM withdrawal would be documented as just that — an ATM withdrawal,” Taylor said.)
• The Honest Pint restaurant and bar accepted a $22.50 EBT transaction on June 5, yet the restaurant/bar does not accept EBT cards as transactions, said owner Matt Lewis.
“As far as I know, we are not able to run those cards.”
• Almost $265 in transactions were made with EBT cards at two USPS offices in Chattanooga. One transaction, dated June 22, was for $216.15.
NEW DHS RULES
Officials with the Tennessee Department of Health and Human Services (DHS), who administer the program, sent the records of the EBT transactions to Tennessee Watchdog in response to an open records request.
In the e-mail with the requested records attached, DHS spokeswoman Valisa Thompson acknowledged that transactions occurred at businesses that sell non-essential items.
“A small percentage of the swipes took place in settings like bars or strip clubs.”
Thompson made the statement before Tennessee Watchdog began investigating the records.
“For background information, we want to make you aware that the Department is working pursuant to the Middle Class Tax Relief and Job Creation Act of 2012, enacted into law in February 2012, in order to ensure that TANF funds are not abused,” Thompson said.
Thompson added that DHS, with help from federal agencies, is developing a plan to prohibit EBT transactions at liquor stores, casinos, gaming establishments, and adult-oriented establishments. The plan will go into effect July 2014.
The plan as described will not prevent transactions at malls, hotels and motels, or beauty supply stores, as they occurred in Chattanooga and Knoxville.
Lawmakers in numerous states are also pursuing legislation to ban the use of EBT cards for the purchase of alcohol, tobacco, and other non-essential items.
Tennessee spends $127 million annually on this TANF program, approximately 16 percent of which comes from state tax dollars. The federal government covers the remainder.
Christopher Butler is the editor of Tennessee Watchdog and the Director of Government Accountability for the Beacon Center of Tennessee. Contact him at email@example.com