GAO: Food Stamp Fraud Rampant And Rising, Yet No Prosecution Of Recipients And Enablers

 

According to a new federal report from the GAO, the federal watchdog agency charged with investigating food stamp fraud, the misuse and fraudulent obtainment of benefits has exploded. Americans receiving food stamps were caught selling and trading their benefits online for art, cash and other non-food products.

One of the biggest drivers of fraud is the lack of accountability or oversight, as neither states nor the federal government are able to track appropriate use. Many proponents of increasing funding for the SNAP program, or Supplemental Nutritional Assistance Program, argue that prosecuting food stamp fraud is difficult due to the rapidly-rising number of food stamp recipients, though there have been successful prosecutions in the past.

Last year, a food stamp fraud investigation targeting Butler County, Ohio, which received shocking increases in food assistance dollars, suggested nationwide reform was badly needed. From July 2012 to June 2013, the relatively small-scope investigation led to the arrest of 116 people, as well as another 100 caught from July 2013 to December 2013.

Under SNAP, 47 million people have been given a total of $76 billion in benefits, which are doled out through state agencies. These same agencies are responsible for addressing SNAP fraud under the guidance and monitoring of the Food and Nutrition Service, but they have neither the will nor political pressure motivating them to do so. As the budgets increase, enforcement and oversight have received a smaller and small share of federal taxpayer dollars. This has led to many states developing different thresholds that must be met prior to even prosecuting fraud.

In Tennessee, a conservative state no less, just $100 in benefits must be fraudulently obtained or used before state officials will consider prosecuting. However, in Texas, another conservative state, officials must prove $5,000 in fraudulent benefits have been obtained or misused before they will consider prosecution.

“Such rapid program growth can increase the potential for fraud unless appropriate agency controls are in place to help minimize these risks,” the GAO investigators said.

The GAO report reviewed 11 state and federal efforts to fight food stamp fraud, the effectiveness of various fraud detection techniques and how the Food and Nutrition Service oversees state anti-fraud efforts. The GAO says that “most of the selected states reported difficulties in conducting fraud investigations due to either reduced or maintained staff levels while SNAP recipient numbers greatly increased from fiscal year 2009 through 2013.”

In the report, state officials interviewed said that it would help if the federal government was open to “changing the financial incentives structure to help support the costs of investigating potential SNAP fraud.”

Meanwhile, as the Butler County investigation also found, many recipients are selling their food stamps for cash, which is then used to purchase other products, often of a luxury and drug-use nature. And it isn’t that hard to find a buyer. The GAO report said investigators easily found “28 postings from one popular e-commerce websites that advertised the potential sale of food stamp benefits in exchange for cash.”

The GAO also found limitations on the effectiveness of recommended replacement card data and website monitoring tools for fraud detection.