USDA STILL Can’t Prevent Food Stamp Fraud

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Thomas Phippen Associate Editor
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The system for investigating food stamp abuse is still in development, two years after revelations of extensive welfare fraud, according to the Government Accountability Office (GAO).  

The GAO revealed that guidelines given to state investigative teams were inadequate and, even when followed correctly, did not address widespread fraud within the Supplemental Nutrition Assistance Program (SNAP).

The GAO provided an update to the House Committee on Oversight and Government Reform as a follow-up to a 2014 report on SNAP fraud investigations.

“FNS [USDA Food and Nutrition Service] officials have reported progress in studying current anti-fraud approaches and developing better data on them but are still in the process of developing the final tools and guidance for enhancing the integrity of the SNAP program,” according to the GAO report.

The GAO investigated how 11 different states handled fake Electronic Benefit Transfer (EBT) card fraud in 2014. EBT cards are the encoded payment cards SNAP recipients use to buy food. Following that report, the FNS issued guidelines for state investigators.

To compound the problem, GAO officials said FNS does not even have trustworthy data on EBT cards. “Despite FNS’s increased oversight efforts at that time, it did not have consistent and reliable data on states’ anti-fraud activities because its reporting guidance lacked specificity,” the GAO stated.

EBT, which works like a debit card, can be issued through the mail from online applications. Legislative efforts to curtail black market sales of fake cards have largely failed. GAO officials said states look at data to determine how many replacement cards have been ordered as an indicator of SNAP fraud. In Michigan alone, 4,935 households ordered and received four or more replacement cards in one year. (RELATED: USDA Official Pleased That People Rely On Food Stamps)

Another way to detect fraud is matching reported income levels with actual wages — households must make below a certain amount per person and per month to be eligible for SNAP benefits. Only nine of the 11 states GAO reviewed were matching wage data, and the method they used to gather income data varied. In Texas and Ohio, investigators contracted a private firm to collect tax and wage data on SNAP recipients.

The sheer number of SNAP recipients make fraud investigations difficult to process. Individual states use their resources to discover, investigate and prosecute EBT fraud cases, and reported difficulty carrying out the massive numbers of investigations. The GAO reported that of the 11 states it studied in 2014, eight claimed the investigation process was extremely complex.

Since FNS manages the welfare program, it’s the agency’s responsibility to deliver guidelines on what constitutes as fraud and how illegal activity is detected, according to the GAO. But inconsistencies in guidelines lead to confusion and waste of state resources.

The GAO reported in 2009, “one state had about 40,000 recipient households, but reported about 50,000 investigation.” During the same time, another state had over 1 million SNAP recipient households, but only 43,000 investigations.

In the testimony document released Thursday, the GAO offered no new recommendations for improving the SNAP program beyond what was recommended in 2014. The GAO suggested in 2014 that “FNS reassess its financial incentives for state anti-fraud efforts and tools for website monitoring; establish additional guidance related to EBT replacement card data; and enhance the reliability of state reporting.”

FNS claims it “has been taking steps to address” the issues brought up in the 2014 report.

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