EBT Helping Make Cutting U.S. Food-Benefit Fraud A SNAP

Government efforts to improve the performance of the Supplemental Nutrition Assistance Program (SNAP) are paying off. Error rates under the program, which delivers food-stamp benefits supported by electronic benefits transfer cards through such contracted issuers as JPMorgan Chase, Xerox and Affiliated Computer Services, are at all-time lows, and the agency is having improved success weeding out retailers illegally trafficking SNAP benefits for cash, according to the U.S. Department of Agriculture (USDA).

In the first quarter of fiscal 2014, the USDA reduced the rate of SNAP trafficking to 1.3 percent of benefits delivered from a high of 4 percent 15 years ago, according to Kevin Concannon, agency under secretary. Helping achieve that success, he said in a statement, has been work over the past several years to modernize the organizational structure to focus resources on retailer integrity, coupled with improved technology that has enabled the agency to better identify and remove stores violating federal law.

The adoption of EBT cards has played a major role in improving the agency’s ability to track and identify improper use of SNAP funds, according to the Center on Budget and Policy Priorities. The center works at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.

“A key tool in reducing trafficking has been the replacement of food-stamp coupons with electronic debit cards like the ATM cards that most Americans carry in their wallets, which recipients can use in the supermarket checkout line only to purchase food,” the center noted in a review of recent SNAP trends. Because the SNAP transactions are now processed electronically, sophisticated computer programs can monitor them for patterns that may suggest abuse and alert federal and state law-enforcement agencies to investigate.

Over the years, USDA has sanctioned thousands of retail stores for not following federal requirements. In fiscal 2013, USDA permanently disqualified over 1,200 SNAP retailers for program violations and imposed sanctions, through fines or temporary disqualifications, on another 785 stores, according to the center.

“While individual cases of SNAP fraud sometimes receive widespread news coverage, it is important to remember that they have come to light because the offenders have been caught, evidence that states and USDA are combating fraud,” the center’s overview notes.

Concannon also cited the achievements the USDA has made in reducing trafficking fraud. “The SNAP program has a very low rate of fraud, and we are working to drive that rate even lower so every single dollar is being used to help families who truly need support,” he said in a statement. “Our anti-fraud efforts are built on innovative, forward-looking tactics that make use of the best technology to track fraudulent activity and remove bad actors from the program quickly.”

To help in that fight, the Consolidated Appropriations Act of 2014 provided additional funding to intensify the agency’s integrity efforts.  This included state grants to strengthen program integrity and prevent trafficking by recipients

“USDA is working on multiple fronts, harnessing modern technology and identifying promising practices, to root out any fraud and abuse from SNAP,” Concannon said  “Not only are we focused on removing retailers who ignore the rules, we are actively working with state agencies to identify and remove recipients who misuse their benefits via illegal trafficking – the sale of food benefits for cash.”

The USDA also is having success in another area. The percentage of SNAP benefit dollars issued to ineligible households or to eligible households in excess of proper amounts, which is now 2.61 percent, is the lowest the agency has measured since it began conducting such measures in 1981, recently released USDA show. The underpayment error rate fell to 0.6 percent, also the lowest on record.

The error rates have continued to decline despite the large growth in SNAP caseloads between 2008 and 2013 caused by the recession and weak economic recovery.

Between 2002, when new rules for penalizing states with high error rates took effect, and last year, the number of states with combined error rates over 10 percent fell from nine to zero, and the number of states from 6 to 10 percent fell from 31 to six, according to the Center on Budget and Policy Priorities’ USDA performance review. “Meanwhile, the number of states with combined error rates under 6 percent, which prior to 2003 was the standard for enhanced funding for outstanding performance, jumped from 13 to 47,” the center said.

Even as SNAP achieved record-low error rates, SNAP participation among eligible people rose from 54 percent in 2002 to 79 percent in 2011, according to the center.