By Kassandra Neuendorff and Kathleen Emerson
The United States Department of Agriculture (USDA) and the Obama administration have been actively working to reduce and prevent the fraud that occurs in the nation’s $75 billion dollar Supplemental Nutrition Assistance Program (SNAP), which assists millions of eligible, low-income individuals and families with hunger safety.[1], [2] Formerly known as the Food Stamp Program, SNAP is the nation’s most important anti-hunger program helping more than 45 million low-income Americans afford a nutritionally adequate diet each month.[3]
SNAP is fully funded by the federal government and administered in conjunction with the states, which operate the program. Each state designs its own SNAP application process, whereby most households apply in person at the welfare office, by mail or online. The program is broadly available to nearly all low-income households, but to qualify for SNAP benefits, a household must meet three criteria (which may be adjusted by states): 1) household gross monthly income generally must be at or below 130 percent of the poverty line or $2,177 for a three-person family in fiscal year 2016 (except households with an elderly or disabled member), 2) household net monthly income must be less than or equal to the poverty line (about $20,100 a year for a three-person family) in fiscal year 2016, and 3) household assets must fall below $2,250, or $3,250 for households with an elderly or disabled member for fiscal year 2016.[4]
Households found to be eligible for SNAP receive an EBT (electronic benefit transfer) card, where benefits are loaded once a month. SNAP benefits vary with very poor households receiving larger benefits than those closer to the poverty line; the average SNAP recipient received about $127 a month in fiscal year 2015. The amount of benefits administered to each household is based on the benefit formula that assumes families will spend 30 percent of their net income for food. EBT benefits can be used to purchase food at any one of the 261,000 retailers authorized to participate in the program, however, SNAP cannot be used to purchase alcoholic beverages, cigarettes, vitamin supplements, non-food grocery items such as household supplies, or hot foods.[5]
SNAP has one of the most rigorous quality control systems of any public benefit program with historically low error rates — fewer than 1 percent of SNAP benefits are issued to households that do not meet eligibility requirements.[6] However, one issue that the federal government and USDA are working to crack down on is SNAP fraud, also known as trafficking, which primarily occurs when SNAP benefits are exchanged for cash. SNAP fraud is illegal and although trafficking does not increase costs to the Federal Government, it diverts the benefits and intended purpose of the program, to provide nutrition assistance to low-income families.[7] Other fraudulent activities related to SNAP can include, ineligible individuals receiving benefits, the obtaining of more benefits than a recipient should receive, as well as a retailer that had been disqualified for past abuses becomes an authorized retailer again, all through misinformation that is provided during the application process.[8]
Increased oversight and the implementation of programs targeted at reducing SNAP fraud by the Department of Agriculture’s Food and Nutrition Service (FNS) has reduced the SNAP trafficking rate from four percent in the 1990s to 1.3 percent as of 2011.[9] However, during 2009 to 2011, the rate of trafficking increased to 1.3 percent of total SNAP benefits from the previous estimate of 1.0 percent in the 2006 to 2008 SNAP trafficking study, while the total value of trafficked benefits increased to an estimated $858 million annually — an increase from $330 million annually in the previous study.[10] Therefore, aggressive action to further reduce SNAP fraud is still taking place on behalf of American taxpayers, and to ensure the program is serving those families that need it most. [11]
Efforts by the USDA FNS to reduce fraud include the use of a detection system to monitor electronic transaction activity at the store level.[12] The SNAP electronic benefits transfer (EBT) gives the USDA the tools to identify, track, and take action against trafficking through the use of an electronic “audit trail” from EBT transactions. The Anti-Fraud Locator using EBT Retailer Transactions (ALERT) system[13] has proven to be a successful instrument in identifying violators and decreasing trafficking as it allows FNS to identify and indict participants who defraud the SNAP program.[14]
According to the USDA’s 2009 to 2011 SNAP trafficking report, the majority of trafficking was initiated by retailers, not the consumers. The report stated that about 10.5 percent of all authorized SNAP stores engaged in trafficking — an increase in the rate of store violations from 8.2 percent in the 2006 to 2008 study.[15] The report attributes the change in the trafficking rate to the growth of small- and medium-sized retailers authorized to accept SNAP, which accounts for 85 percent of all trafficking redemptions.[16]
In 2014, FNS staff reviewed over 17,700 stores to determine where violations were occurring and the Retail Operations Division (ROD) within FNS led approximately 7,700 investigations of authorized retail grocers to determine compliance with the program regulations. This resulted in the permanent disqualification of 1,496 stores for trafficking and the time-limited term disqualification of another 632 stores for violations such as the sale of ineligible items.[17]
While SNAP continues to have one of the lowest fraud rates for Federal programs, the USDA has a zero tolerance policy on fraud and shares the responsibility to eliminate waste, fraud, and abuse between the federal and states governments who work together to administer SNAP.[18] Through FNS’s SNAP Stewardship Solutions Project — a part of the Obama Administration’s ongoing Campaign to Cut Waste designed to fight fraud, abuse and misuse in federal programs — the USDA has and will continue to crack down on individuals who violate SNAP program rules and to take steps to improve SNAP oversight.[19], [20] The aggressive control of the SNAP program has the ultimate goal of ensuring that benefits are utilized responsibly and those with the greatest need are being served.
References
[1] U.S. Department of Agriculture. SNAP Retailer Management 2014 Annual Report (2014).
2 U.S. Department of Agriculture. Supplemental Nutrition Assistance Program (2016).
3 Center on Budget and Policy Priorities. Policy Basics: Introduction to the Supplemental Nutrition Assistance Program (SNAP) (2016).
4 Center on Budget and Policy Priorities
5 Center on Budget and Policy Priorities
6 Center on Budget and Policy Priorities
7 U.S. Department of Agriculture. The Extent of Trafficking in the Supplemental Nutrition Assistance Program: 2009-2011 (2013).
8 U.S. Department of Agriculture. Fraud (2016).
9 U.S. Department of Agriculture. Fraud.
10 U.S. Department of Agriculture. The Extent of Trafficking in the Supplemental Nutrition Assistance Program: 2009-2011.
11 U.S. Department of Agriculture. Fraud.
12 U.S. Department of Agriculture. SNAP Retailer Management 2014 Annual Report.
13 U.S. Department of Agriculture. Fraud.
14 U.S. Department of Agriculture. SNAP Retailer Management 2014 Annual Report.
15 U.S. Department of Agriculture. The Extent of Trafficking in the Supplemental Nutrition Assistance Program: 2009-2011.
16 U.S. Department of Agriculture. USDA Releases New Report on Trafficking and Announces Additional Measures to Improve Integrity in the Supplemental Nutrition Assistance Program (2013).
17 U.S. Department of Agriculture. SNAP Retailer Management 2014 Annual Report.
18 U.S. Department of Agriculture. USDA Releases New Report on Trafficking and Announces Additional Measures to Improve Integrity in the Supplemental Nutrition Assistance Program.
19 U.S. Department of Agriculture. Program Integrity. Food and Nutrition Service (2016).
20 U.S. Department of Agriculture. USDA Releases New Report on Trafficking and Announces Additional Measures to Improve Integrity in the Supplemental Nutrition Assistance Program.
