GAO: States missing food-stamp fraud
- By Daniel Keegan
- Apr 17, 2000
Most states aren't catching food-stamp fraud although they've got the electronic
capability to according to a General Accounting Office report.
The report found that of 29 states with the ability to electronically identify
and document food-stamp fraud, only five states did. Florida, Missouri,
South Carolina and Texas used their electronic benefit transfer and "independently
and proactively analyzed their electronic databases to identify suspect
victims," the report stated. The fifth state, Maryland, used a list of suspected
traffickers provided to them by the Agriculture Department to investigate
Electronic Benefit Transfer systems allow recipients to receive their food
stamps electronically by paying for food using a card, similar to a debit
card. The money is then deducted from their monthly allowance.
In 1998 and 1999, Maryland and Texas were responsible for about 87 percent
of the 6,873 recipients disqualified from the food-stamp program for fraud.
Nine other states investigated suspect recipients that were identified for
them by the government, and disqualified those trafficking. The remaining
15 states of those reviewed did not disqualify any recipient for trafficking
during the 2-year period, the report said.
Food-stamp trafficking occurs when a recipient exchanges benefits to a store-owner
for a reduced cash value, and the store-owner in turn redeems the benefits
from the government for their full value. GAO originally estimated the cost
of trafficking at $815 million annually, but concluded the number was unreliable
because the data did not consider the effects of EBT systems.
The report recommends that the Food and Nutrition Service, which runs the
food-stamp program, take the following steps:
* Work with the five states to determine the best techniques to identify
traffickers and then work with the remaining states with EBT systems to
implement those techniques.
* Periodically develop estimates of the extent of trafficking and then use
that data to develop goals and strategies to reduce trafficking.
Six additional states had EBT systems as of November, 1999, but were not
included in the review because they did not have sufficient time to use
the data to analyze recipients purchasing patterns, the report said. By
October 2002, all states are required to have contracts for EBT systems.
The USDA spent $16 billion on food-stamp benefits last year — distributed
to about 18 million people. Seventy percent of those benefits are distributed