Reducing the Trafficking of Food Stamp Benefits
T-RCED-00-250: Published: Jul 19, 2000. Publicly Released: Jul 19, 2000.
Pursuant to a congressional request, GAO discussed the improper trafficking of food stamp benefits, focusing on: (1) federal efforts to identify storeowners who engage in trafficking; (2) the amount of penalties assessed and collected against these storeowners; and (3) the extent to which states with statewide electronic benefit transfer (EBT) systems are identifying and disqualifying recipients who engage in trafficking.
GAO noted that: (1) the Food and Nutrition Service (FNS) and the Department of Agriculture's (USDA) Office of Inspector General (OIG) use a variety of databases to analyze transaction patterns to identify suspect traffickers; (2) they then conduct costly and time-consuming investigations to confirm actual trafficking; (3) while FNS and the OIG have identified thousands of storeowners who have trafficked benefits, there are opportunities to identify additional trafficking storeowners who are likely to be engaged in trafficking by more effectively using EBT data; (4) under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, federal agencies may use EBT data alone, without the expense of conducting an undercover investigation, to take action against storeowners violating the requirements of the Food Stamp Program; (5) storeowners generally did not pay the financial penalties they were assessed for trafficking; (6) for example, from 1993 through 1998, FNS and the courts assessed or levied about $78 million in financial penalties and interest against storeowners for violating Food Stamp Program regulations, primarily for trafficking; (7) however, they collected only $11.5 million, or about 13 percent of the total penalties; (8) FNS wrote off as uncollectible another $49 million, or 55 percent, of the total assessed or levied; (9) the remaining debt was pending collection at the time of GAO's review; (10) most states with statewide EBT systems were not analyzing EBT data to identify recipients who may have been trafficking food stamp benefits; (11) of the 29 states with statewide electronic benefit systems, as of April 1, 1999, only 4--Florida, Missouri, South Carolina, and Texas--independently analyzed their electronic databases to identify suspect recipients; (12) additionally, since 1994, USDA's OIG has identified about 34,000 suspected traffickers in Maryland and provided this information to that state; (13) all five of these states invested the resources to investigate suspect recipients and disqualify those engaged in trafficking; and (14) during 1998 and 1999, these five states were responsible for disqualifying about 99 percent of the 6,873 individuals nationwide who were removed from the Food Stamp Program for trafficking.