Fraud is gobbling up one-fifth of SNAP benefits; Congress must act to stop it

As the nation embarks on the essential task of crafting this year’s Farm Bill, a pressing matter demands our immediate attention: fortifying program integrity within the Supplemental Nutrition Assistance Program (SNAP).

The urgency to tackle fraud and abuse within this vital social safety net cannot be overstated. While SNAP remains a lifeline for millions of vulnerable Americans, its effectiveness and sustainability hinge on our ability to uphold a high standard of anti-fraud measures.

SNAP has long stood as a cornerstone of our nation’s commitment to alleviating hunger and supporting low-income families. It extends crucial aid to over 40 million individuals monthly, providing them access to affordable and nutritious food. Nevertheless, recent reports and studies have raised valid concerns about the prevalence of fraudulent activities within the program. These activities not only undermine its intended purpose but also erode public trust in government welfare programs.

Efforts to combat fraud and abuse within SNAP should transcend party lines. They reflect a shared responsibility to ensure the efficient and effective use of taxpayer dollars. By allocating resources toward program integrity measures, we can guarantee that those genuinely in need receive assistance, while deterring those who seek to exploit the system for personal gain.

One of the most immediate challenges is the issue of EBT skimming, whereby criminals pilfer benefits from deserving SNAP recipients and convert them to cash or make bulk purchases at major retail outlets. Although card skimmers have long plagued ATM and credit card users, this issue has recently evolved into a nationwide epidemic directly targeting our most vulnerable citizens. While credit and debit cards now incorporate advanced chip technology to thwart criminals attempting to misuse “white plastic” materials, such as hotel keys, for fraudulent purposes, SNAP remains vulnerable.

The safeguarding of vulnerable citizens commences with rigorous identity verification. As attested by the United Council on Welfare before Congress, SNAP stands as the last major government assistance program lacking effective identity verification tools used globally. Outdated rules, regulations, and a lax approach to anti-fraud measures have led to international fraud organizations, terrorist groups, and foreign nation-states taking advantage.

Transnational criminals can reprogram credit card point-of-sale devices to mimic legitimate retailers. They employ massive bot attacks, similar to distributed denial of service attacks on websites, to conduct balance inquiries using scripted PIN numbers. The accounts with matching cards and PIN numbers are promptly drained.

Another pertinent and substantial concern revolves around the trafficking of SNAP benefits, whereby recipients themselves exchange their benefits for cash or non-food items. This not only diverts resources from their intended purpose, but also defeats the purpose of the program, jeopardizing the health and wellbeing of program beneficiaries.

The adage that “it takes two to tango” holds true here — trafficking cannot occur without willing recipients and retailers. According to USDA reports and activities, eliminating dishonest retailers from the pool of 250,000 stores nationwide would require nearly three decades. But the means and authority to begin vetting retailers is lacking and must be provided through legislation.

The 2018 Farm Bill made strides in addressing this issue, but more action is needed. More stringent penalties for traffickers and better data sharing among federal and state agencies can establish a stronger deterrent against such fraudulent activities.

Technology plays a pivotal role in modernizing and enhancing program integrity efforts. Investment in advanced data analytics and digital verification systems can help detect anomalies and patterns indicative of fraud. Through technological leverage, we can streamline administrative burdens for both recipients and program administrators while significantly bolstering our ability to identify and prevent fraud, including identity fraud originating abroad.

This was the objective of the National Accuracy Clearinghouse, a proven project that had been set to roll out to all states by the end of 2021. Regrettably, the USDA chose an alternative pilot program that is set to conclude in 2027.

We possess the ability to utilize data to diminish application fraud, expedite benefits distribution to qualified individuals, and maintain SNAP’s status as the most effective government assistance program. In the aftermath of the fraud that plagued pandemic relief programs, Congress bears the responsibility to safeguard this initiative. This entails enhancing information sharing and coordination to create a more comprehensive and accurate assessment of an individual’s benefit eligibility, reducing the potential for fraudulent claims to slip through the cracks.

Recently, the USDA Food and Nutrition Service disclosed the payment error rate (PER) for all states. The PER forms a component of the accountability checks and balances to ensure that state and county SNAP agencies accurately determine eligibility and benefit amounts.

Regrettably, the national PER hit an all-time high this year at 11.54 percent, meaning that there is $34 million in overpayments daily. Preventing this waste from funding our adversaries isn’t a matter of partisanship — it’s a duty we all share as Americans.

Lastly, states must receive the funds and means to detect, prevent, and prosecute fraud. This becomes challenging when the USDA allocates only 0.05 percent of its budget to program integrity.

As legislators deliberate the components of this year’s Farm Bill, addressing program integrity within SNAP must retain a central position in discussions. This year’s Farm Bill provides an opportune moment to reaffirm our commitment to combating fraud and abuse within SNAP, ensuring its continued service as a lifeline for those in need.

Let us seize this moment to enact substantive reforms that reinforce program integrity, underscoring our unwavering dedication to a fair and equitable society for all.

Andrew McClenahan and Dawn Royal are board members of the United Council on Welfare Fraud, the national professional organization of federal, state, and county welfare fraud directors, investigators, analysts, and recovery specialists.