Food Stamp Fraud: Trafficking in SNAP Benefits
In the past two years, I have run across a number of claims by the USDA against retailers for “trafficking in SNAP benefits.” My clients always ask me what that means, and the answer is simple: it’s food stamp fraud. While food stamps themselves haven’t been used in about a decade (they were replaced with Electronic Benefit Transfer Cards, or EBT for short), the classic concept of fraud with food stamps hasn’t changed. Technically speaking, food stamp fraud can occur on either the beneficiary’s side of the transaction, or on the retailer’s side.
As it pertains to SNAP retailers, trafficking or food stamp fraud is defined by 7 C.F.R. §271.2 as:
- The buying, selling, stealing, or otherwise effecting an exchange of SNAP benefits (formerly food stamps) issued and accessed by EBT cards, for cash or items/services of value other than eligible food, regardless of whether or not the violator committed the act directly themselves, indirectly through other means, or collusion with others, or acting alone;
- The exchange of firearms, ammunition, explosives, or drugs for SNAP benefits;
- Purchasing a product with SNAP benefits that has a container requiring a return deposit with the intent of obtaining cash by discarding the product and returning the container for the deposit amount, intentionally discarding the product, and intentionally returning the container for the deposit amount;
- Purchasing a product with SNAP benefits with the intent of obtaining cash or other valuable items/services besides the eligible food through intentionally reselling or trading the product purchased with SNAP benefits in exchange for cash or consideration other than eligible food; or
- Intentionally purchasing products originally purchased with SNAP benefits in exchange for cash or consideration other than eligible food;
- Attempting to buy, sell, steal, or otherwise affect an exchange of SNAP benefits issued and accessed through EBT cards, card numbers and PIN numbers,or by manual voucher and signatures, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone.
Other Actions that are Food Stamp Fraud
From a SNAP retailer perspective, the USDA considers a variety of other, seemingly innocent transactions, as trafficking. Some of these include: giving cash back to an EBT participant during or as the result of a purchase; marking up prices on non-food items to sell to EBT participants in exchange for their benefits; and ringing up a transaction in which no items are purchased so that the EBT participant can receive money or so that the employee can receive part of the benefit moneys. The best way to determine if something amounts to food stamp fraud is the smell test: does the activity seem like it is try to evade SNAP rules? If it is, then there’s a good chance that it could be trafficking.
State Food Stamp Fraud Laws
As a final note, every state has different food stamp fraud laws – most states have specific criminal laws that can result in series prison sentences for significant violations of the SNAP regulations and the state laws. Some of these laws affect retailers who have knowingly been trafficking in SNAP benefits, and state investigators will visit your store undercover to test your employees. I’d recommend that you take the time to train your employees adequately to prevent any misunderstandings with the investigators.