There are ways around it. Almost all large grocery stores rely on the bar code on every package. This tells the register (really a computer) what the item is. Then the computer can tally the total food items and non food items. The user swipes their EBT card selects the “food stamps/food” button on the pin pad, the computer deducts the amount from the total that the EBT card is qualified to pay for and the customer is left with the cash total (that the cash portion of the EBT card can also pay).
Now.. the small mom and pop gas station/convenience store. Many of these establishments rely on a simple cash register and CC terminal. It’s up to the cashier to know what can, or can not be paid for with EBT. Since the EBT card is swiped through a second terminal it does NOT know what is being paid for and thus, until audited, the store could sell anything, smokes, gas, propane and bill it to a EBT card using the food benefits. There are stories of smaller shops getting busted for food stamp fraud all the time.
There is also the very possible chance this “customer” was attempting to pay for his smokes with the cash benefits many get. Since they are linked to the same card the only way to know if they get cash benefits is to run the card as a EBT/Cash transaction. As wrong as it may sound, the “cash” benefit is just that. Cash. It can be spent on anything or even withdrawn from a ATM in cash.
(Yes I know a bit about this. No I do not have a EBT card. But I do install/repair/maintain Point Of Sale equipment in grocery stores and a rather large “mart” that sees a a lot of EBT cards)
Same here! (Fujitsu). I haven't noticed as much as you about those EBT cards, but I have noticed at Chevron convenience stores that the welfare crowd does love to buy some junk food with their EBT cards, then turn around and purchase $30 worth of lotto tickets with cash. The funny thing is watching them come in 30 minutes later and buy MORE lotto tickets... Ugh.
You are clearly knowledgeable about the program and potential abuses. In my state, however, the only food stores that are eligible to participate as SNAP vendors are ones that have the state supplied (or approved) equipment to read the barcode (there are a few exceptions in extremely remote areas). Now some of the farmer’s markets are accepting SNAP but this is only possible because of the wireless EBT terminals the state distributes to the vendors. The same requirements apply to distribution of EBT cash benefits but as you say, once they have the cash in their hands there are no controls.