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Federal Eye
Posted at 06:00 AM ET, 12/06/2011

Obama administration targeting food stamp fraud as program reaches record highs


A man and his son shop for groceries at a Washington-area grocery store in March. (Matt Mcclain - THE WASHINGTON POST)
The nation’s struggling economy and an uptick in major natural disasters in recent months mean more Americans than ever are using federal money to buy food.

Eye Opener

More than 46.2 million people received a total of $75.3 billion from the Supplemental Nutrition Assistance Program, formerly known as food stamps, in fiscal 2011, according to Agriculture Department statistics released Monday. Officials said participation spiked in the closing days of the fiscal year as Hurricane Irene caused destruction across a dozen East Coast states.

Year-to-year, the program gained more than 6 million new participants and distributed $7 billion in additional funds, officials said.

With more Americans relying on the program, the Obama administration on Tuesday plans to announce new steps to crack down on SNAP fraud amid estimates suggesting as much as $753 million in federal food aid is spent fraudulently each year.

USDA plans to introduce what officials described as “severe penalties” for the illegal “trafficking” of SNAP benefits by retailers and beneficiaries. The officials, who were not authorized to speak publicly on the issue in advance of this afternoon’s formal announcement, did not detail the severity of the penalties.

About 230,000 retailers nationwide participate in the SNAP program, with about 80 percent of funds spent at larger grocery chains. But officials said several smaller retailers often fraudulently obtain PIN or card numbers from program beneficiaries and keep the funds without the person’s knowledge. In the last decade, USDA has disqualified more than 8,300 retailers for such fraud, officials said.

In other cases, beneficiaries who receive monthly deposits of food aid on to plastic cards similar to bank cards intentionally use SNAP benefits to purchase water or other beverages with bottle deposits, dump the liquid and then obtain cash for bottle deposits. Others attempt to sell SNAP benefits in exchange for cash on Craigslist and social media sites.

Tuesday’s announcement is part of the administration’s Campaign to Cut Waste, a program launched last summer at the height of negotiations over the federal debt ceiling to demonstrate a White House committment to cutting waste, fraud and abuse in federal spending. As part of the program, agencies are cutting spending on conferences and office swag and plan to more closely monitor the distribution of Medicaid and unemployment benefits.

In another change, officials said USDA plans to provide state officials with guidance on how to investigate potential cases of SNAP fraud among families that request replacement cards five or more times per year. While USDA officials said many requests for new cards are legitimate, current policy bars state officials from asking participants why they need a new card, making it difficult to track fraud.

The program’s growth has prompted broader investigations of SNAP fraud. In fiscal 2010, state governments conducted more than 847,000 fraud investigations that led to the disqualification of 44,483 individuals, according to USDA. At the federal level, the USDA’s Food and Nutrition Service investigators conducted nearly 5,000 undercover investigations last year, officials said.

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

White House launching new ‘Campaign to Cut Waste’

Senate Democrats unveil scaled-back extension of payroll tax holiday

For more, visit PostPolitics and The Fed Page.

By  |  06:00 AM ET, 12/06/2011

Categories:  Eye Opener, Agencies and Departments

 
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