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Money meant for needy families is going to banks instead

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NASHVILLE, TN (WSMV) -

Many people try to avoid those annoying and expensive fees for using another bank's ATM. Now, the Channel 4 I-Team has followed those fees, and you might have no idea what you're paying for.

Not only are taxpayers footing the bill for those expensive ATM fees, they're paid for with money that is meant to feed and shelter less fortunate families.

That's because the state of Tennessee allows low-income families who receive government assistance to make cash withdrawals using their EBT cards.

The Channel 4 I-Team took our findings to taxpayer watchdog group Beacon Center of Tennessee.

"It's very troubling that this is allowed to take place," said Beacon Center CEO Justin Owen.

Here's how it works: EBT card users who receive Temporary Assistance for Needy Families benefits, known as TANF, are allowed to get cash back from their monthly benefits either at a store or an ATM.

The state says the first two TANF cash withdrawals are free each month when the recipient uses an ATM with the QUEST logo.

But, after that, they're charged a fee. And, that fee is deducted from the amount of benefits the recipient has left on their EBT card.

In 2012, nearly $40,000 was paid in ATM fees. That's nearly $4,000 a month in taxpayer dollars. In 2013, more than $43,000 was paid in ATM fees.

It adds up quickly, and it's all on the taxpayers' tab.

But, it's not just those expensive fees that concern taxpayer watchdogs.

"Ultimately, someone on welfare could go into a bar, use the ATM to get out cash to pay for alcohol," Owen said. "The welfare recipient gets his alcohol, the ATM operator gets a cut off the top and the person who is selling the product gets money in their pocket as well. So the only ones being harmed here are taxpayers."

When the Channel 4 I-Team asked the state about this, they told us the state does not pay ATM fees.

"They're correct. The state doesn't pay ATM fees. Taxpayers do," said Owen.

The Tennessee Department of Human Services - the agency in charge of the state's TANF program - would not talk with us on camera, but in an email, spokesman Devin Stone said:

"TANF recipients are provided information on ATM use and ways to avoid fees in a brochure that accompanies the EBT card."

There's no maximum withdrawal amount set by the state. That means a recipient could take out as much money as their EBT card has left on it and spend that cash however they want.

The Channel 4 I-Team exposed abuses in the system just like that in 2012. We found people getting cash out at places like Hustler Hollywood and liquor stores - money that was supposed to help the most desperate of families.

William Jones receives government assistance, but because he's just on the Supplemental Nutrition Assistance Program, or SNAP, he's not allowed to get cash back. Those who have SNAP benefits, also known as food stamps, can only use their EBT cards to buy food.

We wanted to know Jones' thoughts on those ATM fees and allowing EBT users to withdrawal cash.

"Is it kind of a 50-50 question there? Because if the family needs to pay something like maybe their electric bill with it or something, I can see that part, but I think it should be a limited type where they can only draw a certain amount for that bill. And they got to prove where that money is going to," said Jones.

And some believe the state should ban ATM withdrawals and cash back transactions for EBT card users all together.

"This is designed to go to provide food, shelter and clothing for those children," said Owen, the taxpayer watchdog. "So we should limit the purchase of items that fit into those definitions, and then we could do away with the ATM fees."

The state points out that the amount of ATM fees paid out represents less than 1 percent of the total benefits issued each year. EBT card users are allowed two free store cash-back transactions per month. After that, they are charged a dollar per cash-back transaction. If they get cash back while making a store purchase, they are not charged a fee.

Copyright 2014 WSMV (Meredith Corporation). All rights reserved.

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