Local News

Nov 8, 2013 4:32 PM

6 Investigates: Welfare Money for Luxury?

CORPUS CHRISTI -- If you work to support your family, a chunk of your paycheck, no doubt, goes to taxes that pay for welfare benefits.

But would you be okay with welfare money being splurged on things like salon services?

KRIS 6 News discovered that's happening, and an out-of-state company could be profiting from it.

"My haircuts are $25 and my styles are $25," said Salon and Spa owner Denise Miller.

Her business on Airline takes cash and credit. But, she never imagined accepting the Lone Star card at her business. Turns out she can and a company out of California is hoping to profit if she does.

Miller first got a call from a woman named Erika who works for a company called State Welfare Card Merchant Center.

They are a business in California that sells the terminals that allow vendors like Miller to take welfare funds as payment. "I said and this is on welfare," Miller described the call for us, "she said yes, and I said am I the only business, she said no. But they have sold to many beauty salons."

Denise thought it was a scam; we thought it might be, so we checked with the state, who distributes those federal funds. At first, representatives there thought it was a scam, until they did some more digging.

"Is it okay for someone to use those TANF benefits, the Temporary Assistance For Needy Families to get their hair and nails done," we asked a representative from the State, Linda Edwards Gockel. "Yes," Gockel replied, "in fact the TANF cash benefits can be used for anything except adult entertainment, gambling."

Someone who qualifies for the program can even use the card to pull cash from an ATM.

"It is a cash assistance program for very very poor families and the average amount awarded is under $300 a month," Gockel explained.

But, Miller questions whether those very poor families need salon treatment. "The mothers can cut the kids hair, come on," she said.

While that bothers her as a taxpayer, as a business owner it sent up red flags.

In one complaint board on-line, we found one vendor who did sign up with state welfare merchant center, who complained about an early cancellation fee, a $50 minimum transaction fee and a price tag of $295 to buy the terminal if you cancel service.

There are other complaints, too.

So, while this may be a valid business, even representatives with the state say there are cheaper options for businesses to process welfare money.

Businesses who process TANF funds only can sign up for about $18 a month.

If they accept SNAP benefits, or food stamps, they have to be licensed by the U.S. Department of Agriculture and then the USDA provides a free terminal that will accept both benefits.

As for Denise, she'll stick to taking cash or credit.

Everybody wants to be beautiful," Miller said, "but, they can be beautiful on their own things, they're not taking my taxpayer money to build it up."


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