The Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, has found itself in the crosshairs of numerous political battles and institutional changes. Despite its bizarre and often nonsensical paternalism, and its administrative complexity, SNAP is one of the most important anti-poverty programs in the country—recently made even stronger with enhanced benefits passed during the pandemic.
But last month, the Biden administration let the enhanced benefits expire, leaving the program’s 42 million recipients with $90 less per month than they had for the past three years. These dwindled SNAP funds now face further attacks from the GOP, which is pushing for cuts as part of the ongoing debt ceiling negotiations, plus more cuts in this year’s upcoming farm bill.
At the same time, the U.S. Department of Agriculture (USDA) is instituting a digital overhaul of SNAP benefits with wide-ranging consequences for its recipients’ shopping costs and privacy. The department is continuing to invest in a pandemic-era program that allows SNAP recipients to purchase groceries online and through mobile devices from a select set of large retailers including Amazon, Walmart, and Target. The rollout of online SNAP purchasing platforms, however, doesn’t provide privacy guardrails for the program’s low-income recipients. Grocery stores are rapidly deploying surveillance advertising practices honed by Big Tech, and SNAP beneficiaries are an attractive prospect for all kinds of shady businesses. Without privacy protections, SNAP recipients’ income bracket makes them a vulnerable group for targeted marketing to advertise junk food and even financial products like payday loans, according to a 2020 report by the Center for Digital Democracy (CDD), which continues to monitor the program.
“The digital ad market is rigged to favor large companies that use their ad budgets to exploit consumers, especially low-income people who rely on SNAP payments,” said Jeffrey Chester, the executive director of CDD.
The USDA initiated the program in order to provide SNAP enrollees with the same modern grocery-shopping tools as other consumers—which would be a worthwhile goal if executed in the full interest of SNAP users, of course. Work began back in 2015 with a pilot program limited to a handful of states, but when the pandemic hit, the program became an essential service for people reliant on SNAP to get groceries delivered during the lockdowns. A majority of states signed up with the pilot, and the number of users grew from 35,000 in 2020 to over three million as of July 2022. Now, it’s moved from a pilot to a permanent program with consistent funding.
The USDA promotes online SNAP purchasing as a way to address “food deserts”—the tendency of poor neighborhoods to have no grocery stores and hence no access to fresh food. Instead of traveling long distances to the nearest store, SNAP users could order groceries through retailers’ online platforms using their electronic benefits transfer (EBT) cards.
However, a number of problems have emerged over the course of the implementation of the program. For one, the USDA won’t cover the delivery or service fees for the groceries purchased through the retail partners of the online platform, despite the calls by anti-hunger advocates to include them or risk severely undermining online purchasing. The current arrangement leaves the program out of reach for many SNAP beneficiaries who are already stretching their dollars as far as possible for groceries, especially with delivery fees rising (though grocery pickups are typically available for free). Indeed, the USDA could go further by leveraging the program’s 40 million users to negotiate down delivery prices.
Low-income consumers are a highly targeted group for data brokers and brands because they’re viewed as more susceptible to deal offers.
The other problem is the absence of any privacy protections for online SNAP purchasing.
To be sure, corporate influence over the program is nothing new. Large retailers like Walmart have been embedded with the program since the beginning and even advised the department about the rollout of the pilot. This corporate influence became cause for concern for a number of outside groups. Financial interests have repeatedly exploited the digitalization of food stamps, beginning with the transition to EBT cards in the early 2000s. JPMorgan rapidly built up an “EBT empire” through lucrative state contracts and issued high fees on users for financial transaction costs. Though state and federal actions have since brought down the EBT fees on both merchants and users, sole-source contracting is still an issue and drives up costs for the program. SNAP recipients can also still be penalized by financial transaction providers for EBT card loss, out-of-network use, and balance inquiries.
Today, a collection of groups including CDD and Color of Change have warned about the new danger to SNAP users if the USDA doesn’t take precautions, namely that of retail media. This refers to surveillance advertising sold by retailers themselves, like the sponsored items one now sees plastered all over every Amazon search. Over the past five years, retail media has rapidly grown into one of the most highly coveted commercial spaces for brands trying to reach consumers with targeted ads. Large retailers like Amazon, Target, and Walmart now wield their own adtech to compete with the surveillance ad model pioneered by Facebook and Google. They track users across the internet collecting vast troves of data and building detailed personal dossiers to sell ad spots and boost product sales.
While digital ad sales are still dominated by Google and Facebook’s duopoly, e-commerce giants led by Amazon have made rapid inroads into the market. Every large grocery chain now carries both online sites for shopping as well as digital in-store apps for subscription users that it lures through discount deals and premium benefits. The proposed Kroger merger with Albertsons, for instance, is in part a play for retail media dominance by fusing the two grocers’ large data portfolios on customers. If approved, it would allow the new behemoth to upgrade its dossiers by combining purchase history with health data from their pharmacy business lines.
Social media platforms sell ad spots by drawing eyeballs. But big retailers have a big advantage when it comes to courting brands’ ad dollars, because they draw traffic from customers already eager to spend on products, and hold vast amounts of first-party data on consumers’ shopping choices. That information, combined with other third-party data input from brands’ marketing operations, makes for a potent cocktail of behavioral ad targeting.
The average consumer will experience the effects of retail media’s data collection typically through two avenues. When consumers shop in-store on a grocery chain’s app, which is increasingly common, the app collects the user’s location and other browsing information. With online shopping, grocery websites use surveillance technology like cookies to track users across the web.
By using data analysis tools on consumer shopping patterns, retailers then coordinate with the brands they carry to craft personalized marketing strategies to deploy on consumers.
This marketing strategy can take the form of eerily timed and invasive ads directed at customers. A 2020 report showed, for example, that Target’s shopping program was capable of zeroing in on a pregnant mother, estimating the due date of her child, and then bombarding her with baby supplies through both emails and notifications.
This race for niche demographic information on consumers is where the financial status of SNAP users comes into play. As several investigations into ad networks have shown, low-income consumers are a highly targeted group for data brokers and brands because they’re viewed as more susceptible to deal offers. SNAP users would immediately be identifiable and placed in such categories by marketers.
The CDD shows in a report on SNAP online purchasing that Big Food companies represent the bulk of the retail media spending for email promotions and deal offers, typically peddling less-healthy food options. In many cases, those food products being sold to SNAP recipients conflict with the USDA’s own food and nutrition standards.
In the short term, a coupon deal for a six-pack of Coca-Cola, for example, may sound benign. But the danger is that these retail platforms, like social media, can refine their ad profiles and become ever more sophisticated at manipulating their customers with behavioral science. From there, it would be a natural step to start selling outright predatory products such as payday loans or risky mortgage lending. Indeed, these products have frequently been advertised through digital ad networks, as an FTC report from this past September warned.
In addition, even discount deals can run afoul of USDA rules that prevent retailers from engaging in price discrimination against SNAP beneficiaries. The main objective of such rules is to prevent charging higher prices, but they could also cover lowballing SNAP users as part of a data collection strategy that ends with trying to sucker them into buying junk products.
However, all is not lost yet. The USDA could implement a ban on SNAP data collection as a condition of the corporate partnerships it strikes with the program’s retailers. Both the CDD and civil rights groups wrote a letter to the USDA in 2020—when it was run by Trump appointee Sonny Perdue—making the case that recipients of a government program should be protected from forms of invasive data collection. Outside pressure continues to mount on the department as the online SNAP program becomes permanent. So far, the USDA under Secretary Tom Vilsack still has not heeded their calls. But he might be induced to change his mind.
