GAO: Growth In Food Stamp Recipients Overwhelms Anti-Fraud Efforts

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Peter Fricke Contributor
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State-level efforts to combat fraud in the Supplemental Nutrition Assistance Program (SNAP) have met with mixed success, according to a report released by the Government Accountability Office.

Conservatives told The Daily Caller News Foundation Friday that the large number of food stamps recipients is to blame.

States bear primary responsibility for identifying fraud among SNAP recipients, with guidance and monitoring from the federal Food and Nutrition Service (FNS), while SNAP fraud committed by retailers is monitored by the FNS directly. SNAP fraud includes both misrepresentation of eligibility and trafficking of benefits, which is defined as “the misuse of program benefits to obtain non-food items.” (RELATED: 11 Things You Didn’t Know You Could Buy With Food Stamps)

The GAO examined the fraud-detection efforts of 11 states, which together serve roughly one-third of all SNAP recipient households, and found that most of them “mainly pursued cases of eligibility fraud [because] trafficking is more difficult to prove.”

In fiscal year 2013, SNAP provided $76 billion in benefits to about 46 million people, and the FNS “estimated an improper payment or error rate of the program at 3.4 percent, which represented an estimated $2.6 billion in wrongful payments.” (RELATED: CBO: Cost of Food Stamp Program Increased 135 Percent Over Last Four Years)

Over 90 percent of the errors were verification errors, which “occur when an agency fails to or is unable to verify recipient information…even though verifying information exists in third-party databases or other resources.”

State officials say this is partly due to significant growth in the number of SNAP recipients increasing the burden on their limited investigative staffs, which are “also responsible for pursuing fraud in other public assistance programs.” (RELATED: Record 23,116,441 Households on Food Stamps)

Moreover, the GAO found that new fraud-detection techniques promoted by the FNS, such as e-commerce and social media monitoring, are “less effective than manual searches in detecting postings indicative of potential trafficking.”

Another new strategy, implemented this year, requires states to track recipients who request four or more replacement cards within 12 months, because such frequent requests could potentially indicate trafficking activity. However, state officials told the GAO that, “they have not had much success in detecting fraud through that method,” which has mainly led them to investigate recipients making legitimate requests due to unstable living conditions or a misunderstanding of how to use the program.

To help states deal with the increased SNAP caseload, the GAO recommends improving financial incentives, particularly for fraud-prevention measures. Currently, states are eligible to retain 35 percent of recovered overpayments, “but when a state detects potential fraud by an applicant and denies the application, there are no payments to recover.”

This system creates a perverse incentive for states to focus on enforcement rather than prevention, even though evidence suggests prevention is cheaper and more effective. When budget cuts forced Florida to cut its investigative staff in 2005, for example, officials shifted their focus toward prevention efforts, which “allowed the state to more cost-effectively manage its efforts to combat potential fraud.”

According to state officials interviewed by the GAO, stronger incentives would not only enhance existing anti-fraud efforts, but could also increase the resources available to investigators if the FNS were to require that the incentives be directed toward additional anti-fraud efforts.

Some conservatives, however, feel that attempts to improve fraud-prevention efforts fail to address the root of the problem, which is the historically high number of food stamp recipients. Katherine Rosario of the Heritage Foundation pointed out to TheDCNF that, “over the past five years, the food stamp program has grown almost 40 percent.” She predicts that, “as long as food stamp participation remains unreasonably high, states will continue to have difficulty effectively combating fraud.”

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