People using the BasicsCard are spending their benefits on banned items and bartering groceries for alcohol.
Selected welfare recipients participating in an income management trial in New South Wales, Queensland, South Australia, and Victoria have 50 to 70 per cent of their benefits quarantined for essentials.
Cigarettes, alcohol, pornography or gambling are banned purchases.
However, the ABC has learned that people who have been forced onto the BasicsCard are frequently finding ways around regulations, adding weight to suggestions that the scheme is an expensive failure.
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