Even as may states reduce the amount of aid provided by SNAP benefits, the reports of fraud continue to increase. During 2015 there were reports of a one million dollar case in Rhode Island, a $2 million violation in Ohio, and countless others. The total volume of waste may have been as high as $5 billion dollars.
This fraud is taking assistance away from those who need it the most. It can also shed the political spotlight on this government entitlement program and lead to more people calling to scale it back even further.
The scams are wide ranging and the abuse comes in many forms. There are thousands of stores of people “turning” their EBT food stamps into cash, and then buying items such as cigarettes, alcohol, gasoline, or other non-critical or banned food items.
How this type of fraud may work as follows. People go to a store and buy some legit groceries. But the store or cashier will intentionally overcharge them. This is done in cohots between the shopper and cashier. Then some of what was overcharged is kept by the store, and the balance is given as cash to the food stamp beneficiary.
While the exact amount of waste and fraud in 2015 is hard to measure, it is estimated that it is in the low single digits. It will vary by state, but it may be from 3-7%. While to some people it may not sound like much, when the total expenditure across the nation is about $70 billion dollars, a few percent of that can be a few billion dollars. This is a significant amount of fraud.
This includes people lying on their initial application as incorrect payments made by the government. The amount of errors made in payments (which is mostly paying too much on an EBT card) to families may also be as high as 4% in calendar year 2015. The amount of errors made by the state or federal government is actually higher than other forms of fraud. This shows how inefficient that the program can be when billions of dollars in SNAP food stamps are wasted by administrative mistakes.
Fraud is also taking place on online forums. The number of these created during 2015 is estimated to have increased by about 30%. This is where an EBT beneficiary seeks a store in which they can work together to scam the system. Both parties “meet up” in the form to figure out how they can drain cash out of the system.
Just imagine if that did not take place. Those billions of dollars can be allocated to many other government assistance programs. Or it could be used to help pay for job training or placement, and services that can break the cycle of poverty.
If you are aware of a store or person abusing the SNAP food stamp system, there is a hotline to call. The main USDA number to make a report is (800) 424—9121. Each state will also have their own hotline to report fraud.