Several second-hand whiteware dealers have been referred to police for further investigation after an undercover sting by Work and Income.
The Government says the dealers operated unethically by offering cash or other goods in exchange for vouchers that were meant for essential appliances.
Nine traders were targeted by Work and Income, which was acting on anecdotal evidence.
Social Development Minister Paula Bennett says five of the dealers offered to take the vouchers and let a shopper choose items other than whiteware. Those items could be televisions, stereos and other equipment.
Ms Bennett says she is disgusted by what she calls dodgy traders exploiting the system.
More than 29,000 advances were granted to beneficiaries by Work and Income in the year to March to buy fridges or washing machines, costing $13.7 million, up from $9.5 million four years ago.
Beneficiaries are required to repay the advance.
