Alabama’s Department of Human Resources is seeking a one-year, sole-source contract to combat SNAP benefit theft as the agency also works to reduce a separate problem that could eventually cost the state millions of dollars.
Brandon Hardin, DHR’s deputy commissioner for workforce, told lawmakers the proposed fraud-mitigation contract is specifically aimed at stopping criminals from stealing benefits from Alabama EBT cards.
The contract would be a sole-source addition to the state’s existing EBT services contract because the fraud-mitigation services became available after the underlying EBT contract had already been awarded.
Hardin said Alabama began seeing benefits stolen from EBT cards through transactions occurring outside the state, including overnight purchases in places such as New York and New Jersey.
DHR has responded by upgrading EBT cards to chip technology and adding controls that allow recipients to lock and unlock their cards through their phones.
Alabama also blocks out-of-state and online transactions on EBT cards by default, requiring recipients to unlock their cards when those purchases are necessary.
The agency has reported substantial losses from benefit theft. Between May 2023 and December 2024, DHR replaced $15.9 million in SNAP benefits stolen through EBT fraud.
Hardin emphasized, however, that those thefts are not what the federal government measures when calculating Alabama’s SNAP payment error rate.
“There’s a significant difference between fraud and what you’re saying with a payment error rate,” Hardin said.
The payment error rate measures mistakes in determining eligibility or benefit amounts. Those errors can include situations in which a household’s circumstances change but the information used to calculate benefits is not updated correctly. The errors can result in either overpayments or underpayments.
Alabama’s official SNAP payment error rate was 9.52 percent for fiscal year 2025, according to federal data. Under changes enacted by Congress, states with error rates between 8 percent and 10 percent could eventually be responsible for 10 percent of their SNAP benefit costs.
That makes lowering the rate a significant budget issue for Alabama.
The Public Affairs Research Council of Alabama has estimated that Alabama could face roughly $174 million in annual costs beginning in fiscal year 2028 if its rate remains at 9.52 percent.
Hardin told lawmakers DHR believes it has already made significant progress.
The agency’s unofficial fiscal year 2026 rate is currently 8.64 percent, while the rate for April alone was 4.97 percent. Those figures have not yet been validated as the state’s official federal payment error rate.
Hardin said DHR has implemented more than 15 changes intended to reduce the rate and is seeking additional time from Congress to demonstrate the results of those changes.
A Senate proposal under discussion could delay the new financial requirements by one or two years, although Hardin said the current version would still rely on fiscal year 2026 data.
The delay, he said, would give Alabama more time to demonstrate that its reforms are lowering the rate.
“We want to make sure that we get that shot to be able to show you all that we can drive our error rate down and we can use current statistics to do that,” Hardin said.
