Dr Ann Jaron, a councillor for Abbey ward covering Bearwood, said some people posing as rough sleepers may not be homeless.
She said beggars could be working for someone or trying to pay “for the roof over their head”.
Dr Jaron, who has lived in Bearwood since 1986, and was first elected as a councillor in 1996, said: “It has been a long-standing issue.
“Some of these people are genuinely homeless but quite a number aren’t.
“I witnessed myself, outside one of the shops, as I was coming out a supermarket, someone said ‘boss wants your money’.
“They came up to a young person sitting on the pavement, demanding their collections for that day.
“I suspect, what is happening, most of them will have some sort of address, I suspect probably a shared room, not even their own room, and they will pay for it by begging and possibly other services.”
She said the issue was a “very difficult situation” which requires support from Sandwell Council and West Midlands Police.
She said: “Homeless officers from Sandwell have been working in that area trying to engage people and with a fair bit of success, particularly over the Covid period.
“Not everybody wants to engage.
“It is possibly because they are locked into some sort of problem.
“They may, effectively, be working for the roof over their head by begging and handing over the money.
“It is an awful, awful way to live.”
Dr Jaron added: “There was one regular woman, she had a fairly local accent, and there was someone else with a Liverpool accent.
“It is just poverty and social difficulties, alcohol problems, drugs problems.
“I think the addiction stops people engaging with services that can help, so that is the council and various charities that would help them.
“The cost of housing and renting is just shooting through the roof.
“It just makes life more and more difficult if you are really at the bottom of the ladder for everything.”