Government Reports $2.6 Billion Loss in Food Stamp Fraud

Updated on January 18, 2017

Food Stamp fraud by retailers


Security Welfare programs subject of debate

As the debate over drug testing recipients of taxpayer-funded benefits like SNAP cards (food stamps) continues, a fresh Department of Agriculture inspector general’s report concludes that about $2 billion in food stamps were redeemed by businesses operated by dead people. Opponents of drug testing say there is no need to test individual beneficiaries for drug use and that it might harm the children of drug users should those entities be subjected to drug testing as a condition of receiving government aid. However, the new IG report does not include the cost to taxpayers by fraud perpetrated by individual recipients.

State EBT Cards
State EBT Cards | Source

Retailers seldom scrutinized, program standards lax

The new report shows retailers using SNAP card registrations bearing the Social Security numbers of dead people alone cost taxpayers billions. Indeed, the owners of another 193 retail establishments registered their stores under the Social Security numbers of children under the age of 18. This report suggests a principle element of our welfare system is rife with fraud.

“We found that 3,394 authorized SNAP (Supplemental Nutrition Assistance Program) retailers used Social Security Numbers (SSN) that matched SSNs of deceased people," the U.S. Department of Agriculture's inspector general said.

Should Food Stamp retailers be subjected to verification of identity to prevent fraud?

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$2.6 billion in fraud including businesses "operated by "children"

In all, the report cited 3,394 stores owned by 1,819 people that were using Social Security numbers from the Social Security Administration's Death Master File. Those retailers redeemed approximately $2.6 billion in SNAP benefits when the 193 businesses registered to the Social Security numbers of children are included.

Report slams system's security assurance

The government report warned that the nation's Food and Nutrition Service programs have no assurance that retailers are who they claim to be. The gaping lack of review allows scam retailers to redeem SNAP payments for government cash using fake Social Security information and numbers. The SNAP program costs taxpayers $70 billion per year and is assumed to assist 46 million welfare recipients.

According to the report, only 147 business owners were investigated last year and 122 have been removed from the program, a small fraction of the nearly 280,000 retailers claiming $23 billion in food stamp transactions. Seven more stores were deemed ineligible to redeem food stamps because of other violations and only 18 businesses out the 147 were found to be valid, including a handful of spouses operating stores under their deceased spouses’ Social Security number.


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