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.

  1. This is a red herring from the Federal government. For the first time ever there was a conference of the Program Integrity adminstrators from the Northeast states. There is not a demonstrative problem as opposed to “dumping” where consumer items are dumped out in the parking lot and the deposits are exchanged for cash. The feds are also not dealing with couples living together, but are allowed to have separate cases under the fallacy that they are eating and buying separately. SNAP is just another redistribution of wealth.

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