Stocked with food that expired years ago and lined with dusty shelves, some New York City bodegas and delis have allegedly been operating as fronts for organized Electronic Benefits Transfer (EBT) card-skimming schemes, using hidden devices to steal information and ultimately taxpayer-funded benefits, according to an expert who is sounding the alarm.

Criminals attach hidden skimming devices to checkout payment terminals to capture EBT card data while using pinhole cameras or keypad overlays to record customers’ PINs, according to the FBI. The stolen information is then used to create counterfeit cards and drain Supplemental Nutrition Assistance Program (SNAP) benefits, costing consumers and financial institutions more than $1 billion each year.

“A large percentage of these convenience stores are actually EBT ATMs,” Haywood Talcove, CEO of LexisNexis Risk Solutions Government, told Fox News Digital “Their sole purpose is to traffic cards, not sell food.”

Speaking after joining the Secret Service on a recent fraud operation in New York City, Talcove continued: “I saw firsthand a can of tuna that expired three years ago. I saw firsthand pancake syrup that was two years expired, sardines that were expired. What struck me is the industry that is built around trafficking these EBT cards, taking away money from individuals and their families that actually need it.”

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According to the Secret Service, the agency’s New York Field Office conducted a three-day operation across Brooklyn, the Bronx and Queens in June that uncovered 35 illegal skimming devices and prevented an estimated $36.5 million in fraud, marking its fourth anti-skimming operation in New York City this year.

Eligible households receive monthly SNAP benefits on an EBT card, which works like a debit card and is used to buy eligible food at authorized retailers, according to the U.S. Department of Agriculture.

Talcove said he saw multiple stores on the same block with shelves stocked with expired food, which led him to believe some were operating primarily to facilitate EBT fraud rather than as legitimate grocery sales. During the operation, the Secret Service uncovered skimming devices on checkout payment terminals that can capture EBT card data that criminals can encode onto counterfeit cards for unauthorized purchases or withdrawals.

“The logical question you ask yourself is, ‘How can there be enough economic activity to sustain stores that are all selling the same thing and they’re very small?'” he said.

Talcove said “that’s not why they’re there,” adding the condition of many stores led him to believe some businesses were operating primarily to facilitate EBT fraud rather than as legitimate grocery stores.

“They’re there to not provide nutrition because across the street is a wonderful supermarket with fresh food and fresh fish and produce and shelves that aren’t dusty that don’t sell food that’s expired,” he said.

Although the fraud may appear to be carried out by only a small group, Talcove said it runs much deeper than that.

“You start looking at these groups and you very quickly realize they’re criminal and they’re organized,” he said.

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Michael Peck, assistant special agent in charge of the U.S. Secret Service’s Criminal Investigative Division, told The City Reporter in June that criminals have packed as much as $1.2 million in stolen cash into dishwashers before shipping it overseas, and that the runners installing skimming devices earn about $150.

The City Reporter, citing the Secret Service, also reported that many of the organized crime groups behind the EBT skimming schemes originate in Eastern Europe and are “living large off the scam, renting $10,000-a-month apartments and Lamborghinis.”

However, Talcove said the fraud extends beyond bodegas and delis, arguing many other retailers fit “into this category.” He also said the SNAP program does not require itemized purchase records, making suspicious transactions harder to detect.

“I’ve got firsthand insights into one that was pretending to be a store, but it was actually a laundromat,” he said. “I’m looking at one right now on the West Coast that is pretending to be a store that is actually a strip club accepting EBT.”

Talcove called the fraud the “perfect scam,” citing weak identity verification, outdated card technology, and limited purchase records.

“Number one, you’re not going to get caught, number two, the government never runs out of money, and number three, the SNAP program has fundamental flaws in its administration,” he said.

But Talcove said the “real victim here” is the families on SNAP who don’t receive the food they need, something he said he witnessed firsthand in New York City. According to the U.S. Department of Agriculture, more than 250,000 retailers nationwide are authorized to accept SNAP benefits.

“The problem there is they have families,” he said. “They have children that are hungry and the money that was intended to go to the child is being diverted to something that it was never intended to do.”

Emphasizing the impact, Talcove said hard-earned taxpayer dollars are being lost while criminals take advantage of those “who show up every day, that try to do the right thing.”

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“They’re transnational in nature,” he said. “They are taking advantage of our empathy because they understand that you’re not gonna stop somebody from getting an EBT or SNAP benefit, because who would want to take food away from the hungry?”

Talcove proposed “a concerted effort” to remove suspicious stores from the SNAP program, upgrading EBT cards to chip technology, strengthening identity verification, and monitoring large purchases to detect potential fraud.

In a statement to Fox News Digital, a New York City Department of Social Services spokesperson said EBT skimming is a “nationwide crisis,” saying the city has been working closely with state officials and law enforcement to help “vulnerable” New Yorkers who may be impacted.

Just this month, New York Gov. Kathy Hochul announced the state will begin replacing current EBT cards with more secure, chip-enabled cards in early 2027 to help stop fraud.

Following five years of investigations, Talcove praised the Secret Service but argued arrests alone won’t solve the problem.

“It is just so part of the ecosystem now,” he said.

Talcove said “once you see it, you can’t unsee” the “unconscionable” fraud where businesses disguise themselves as normal stores while operating as something else entirely.

“How is it that a laundromat is pretending to be a place where you can buy food?” he said.