Food Stamps for Everyone!


Most people hear the words ”Supplemental Nutrition Assistance Program” (SNAP) and still think food stamps. You’d think the phrase ”food stamps” would be clear to most people, but it’s amazing how many individuals read ”food” as ”whatever you want.” More and more, the Electronic Benefit Transfer (EBT) cards loaded with funds to buy food are being fraudulently used to purchase anything but food. Today’s Fraud of the Day from The Washington Post makes it clear that the U.S. Department of Agriculture (USDA) is committed to working with states to prevent food stamp fraud.

The article reports that the USDA is proposing new rules that would let states demand formal explanations from beneficiaries who seek more than three replacement cards a year. If the individuals deny the state an explanation, the state may be able to deny replacement cards. (Kudos to efforts to crack down on fraudsters!)

Food stamp fraud costs taxpayers roughly $750 million per year. The thinking behind the new rules is that if an individual reports multiple lost EBT cards, they may not be lost at all – instead, the beneficiary might be trafficking in EBT cards. (Shocking, I know.) The most common way fraudsters benefit from EBT cards is when retailers allow users to turn in their cards for lesser amounts of cash. The USDA is now concerned by individuals selling or trading their cards on consumer-based websites. And, at least two of these sites are now both monitoring for illegal offers of food stamp benefits.

According to the article, ”all states are required by law to reissue lost or stolen cards to those who are eligible for benefits.” One state official says the new rules ”would help with the trafficking and let individuals know they are being observed and watched.”

Obviously, officials at the USDA understand that EBT cards are lost multiple times for innocent reasons (e.g., food stamp recipients who are homeless or mentally ill) and are sensitive to these cases. That said, taxpayer money is being lost to people who are fraudulently using EBT cards to purchase anything from soda pop and chips to drugs and firearms. Let’s hope these new rules may help to improve fraud detection and enforcement.

Source: Today’s ”Fraud of the Day” is based on the article ”USDA Targets Food-Stamp Fraud with State Effort,” written by Sam Hananel and published by The Washington Post on May 29 2012.

Some food stamp recipients are ripping off the government for millions of dollars by illegally selling their benefit cards for cash — sometimes even in the open, on eBay or Craigslist — and then asking the government for replacement cards.

The Agriculture Department wants to curb the practice by giving states more power to investigate people who repeatedly claim to lose their benefit cards. It is proposing new rules that would allow states to demand formal explanations from people who seek replacement cards more than three times a year. Those who do not comply may be denied replacement cards.

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Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.