It's the Party Pooper: USDA to Blast Fraudsters with a New Cache of Weapons

Reiterating his Department's "zero tolerance" policy towards fraud in the SNAP, program, formerly called food stamps, Under Secretary of Agriculture Kevin Concannon on Thursday announced a number of steps USDA is taking to crack down on benefit diversion and misuse.

The biggest change is that the Department is moving away from an "either/or" punishment for retailers who traffic SNAP benefits. Currently, retailers found to have trafficked in benefits face disqualification from the program or a financial penalty, but not both.

The Food & Nutrition Service within
USDA is the agency that oversees
and monitors the SNAP program,
formerly known as Food Stamps

The proposed new sanctions allow USDA to permanently disqualify a guilty grocer, plus hit him with a hefty fine on the way out the door.

In a release, Concannon stated that "These additional measures reaffirm our ongoing commitment to ensuring these dollars are spent as intended-helping millions of people in need get back on solid economic footing."

The new regulations would require states to take "specific actions" to nail fraudsters on the front end and to make sure ineligible applicants don't get certified to receive SNAP benefits.

USDA has been doubling down on fraud detection and control in the wake of increased oversight by the Administration and Congress. Recently the Department has:

• Sent letters to popular social media sites seeking to prevent Craigslist, Ebay, Facebook and Twitter from becoming an online flea market for buying and selling SNAP benefits
• Proposed regulations that would give states the option of making a recipient contact the state agency for a new card when there have been an excessive number of new card requests on an account
• Proposed tougher rules for so-called high-risk stores trying to get approval to redeem SNAP benefits
• Worked more closely with state and other federal agencies spreading the word about program violators

USDA has also launched a "Stop SNAP Fraud" web page to provide information on reducing fraud in the program. The site includes Frequently Asked Questions about fraud, details the Department's efforts to fight fraud, and includes instructions on reporting and fighting fraud. 

The GAO Weighs in on Restricting TANF Access

So stopping welfare recipients from getting their cash at ATMs in “vice” locations—liquor stores, casinos or strip clubs—may not be as easy as Congress thought. The Government Accountability Office has released its long-awaited report on restricting where EBT cards may be used to access Temporary Assistance for Needy Families benefits, commonly known as welfare.

Congress included the TANF restrictions in the bi-partisan Middle Class Tax Relief and Jobs Creation Act of 2012. The thinking seemed to be that because TANF is distributed in many states through electronic benefits cards that it would be easy to follow an electronic trail to see if beneficiaries were using their benefits in one of the sin sites.  One representative likened creation of this electronic trail to “throwing a switch.”

After studying the issue for half the year, the GAO isn’t so sure about that. Congress' consulting arm was pretty clear in its conclusions: 

• There’s not enough data in that electronic trail to track a beneficiary to the liquor store
• What data there is in that electronic trail isn’t all that accurate
• Some of the voluntary, non-electronic methods that states use to reduce the misuse of TANF funds and other subsidies seem to work better

 The GAO report had been requested by Sen. Susan Collins (R-ME), the ranking member of the Senate Committee on Homeland Security and Governmental Affairs.

 In its conclusions the GAO tracks closely to the white paper the Electronic Funds Transfer Association and its eGovernment Payments Council issued earlier this year.

 The GAO's methodology included reviewing documentation and interviewing officials in the ten states with the highest TANF block grants in terms of dollars. Together these states represent 66 percent of all TANF block grant dollars. The GAO also obtained EBT card-transaction data from four of the ten states in order to determine whether the transaction data could be useful in developing a systemic solution for tracking where TANF funds are accessed.

 GAO concluded that EBT transactional data are "not sufficiently reliable for the purpose of performing systematic monitoring of transactions in locations that are inconsistent with the purposes of TANF.” This was one of the conclusions reached in our white paper.

 Furthermore, GAO concluded that addressing these limitations in such a way as to make transactional data a useful tool in monitoring where EBT cardholders get and use their TANF funds could require "significant resources," another conclusion of our white paper.

 GAO suggested that states consider other non-systemic methods for identifying and monitoring where TANF is accessed and used, a position EFTA and the Council have advocated for some time.

 GAO has shared its findings with the Department of Health and Human Services, which is writing regulations on state compliance with a new federal law that mandates restricting TANF access in gaming establishments, liquor stores and adult-oriented businesses. Those regulations have yet to be published.

 Since late 2011 EFTA and the Council have sought to inform the regulatory process on this issue in a number of ways. Here’s what we did:

•  December 2011: Meeting with GAO
• January 2012: Conducting a survey of state EBT directors on benefit restrictions
• February 2012: Issuing our white paper on benefit restrictions
• March 2012: Having regulators from DHSS and the principal investigators from GAO speak at our eGPC meeting in Washington
• April 2012: Meeting again with the regulators and hosting a webinar on the regulatory process, in which the DHHS regulators participated
• May 2012: Conducting a second survey on TANF restrictions
• June 2012: Responding to the Department of Health and Human Services Request for Public Comment on the issue of TANF restrictions

No one is advocating that states should turn a blind eye to the diversion of benefit from their intended use of helping families get through the rough patches of life. Frankly, I think most people would be happy if there were a simple way to figure out which beneficiaries were using TANF to play the slots and which were using it to pay the rent.

TANF is a successful program because it gives states administrative flexibility to manage the program and provide a temporary lifeline to families in need. Families have to make choices about how to use a time-limited amount of money, and those choices can’t include wine, women and Keno. Whatever regulations DHHS comes up with, let’s hope they give states that administrative flexibility to come up with blocking solutions that actually, rather than theoretically, work.

If you’re interested in what GAO has to say on the subject, click here.