State, USDA sharing data to catch fraud

OLYMPIA – State and federal agencies are teaming up in an effort to fight food-stamp fraud.

While the Washington Department of Social and Health Services is tracking people who misuse their benefits, the U.S. Department of Agriculture is going after stores that illegally redeem benefits in the Supplemental Nutrition Assistance Program, or SNAP. A new agreement between the two agencies is expected to help them find cheaters by analyzing each other’s data.

SNAP is commonly referred to as food stamps, although states no longer issue the stamps or coupons that once defined the joint state-federal program. Instead, some 47 million Americans last year received aid worth about $68 billion through Electronic Benefits Transfer cards.

Like the old coupon system, EBT cards can’t be used for certain items, including alcohol, tobacco and prepared food.

Kevin Concannon, USDA undersecretary for food, nutrition and consumer services, said only about 1 percent of benefits are lost to fraud, but that’s still about $700 million and “it’s a problem we pay careful attention to.”

A common source of fraud is a recipient trading his or her EBT card for cash of lesser value, Concannon said in a recent interview. Sometimes the cards are sold on Craigslist or eBay, although those websites have policies that forbid it. Sometimes a store will make a trade with the recipient.

That happens almost exclusively at small stores, Concannon said. “It just isn’t tolerated by large supermarkets or the chains” because they could lose their ability to redeem all SNAP cards, he said.

“It tends to occur in repeat locations, especially in larger cities and urban areas,” he added.

Washington has an improved system of tracking misused EBT cards by welfare clients. But Steve Lowe, of the DSHS office of fraud and accountability, said the state agency’s ability to analyze patterns of fraud isn’t as sophisticated as the federal program.

In April, Washington became one of four states that agreed to transfer its data on client fraud and misuse to the USDA, which can then be compared and analyzed with data on fraud by those who redeem the benefits.

Washington doesn’t have a high number of fraud cases compared to the rest of the country. Of the 336 stores that were fined or temporarily disqualified for violating SNAP program rules in the first half of fiscal 2013, only seven were from Washington. Of the 536 stores permanently barred from the program, only nine were from Washington.

Rather, the USDA liked that Washington was being “proactive” on fraud, Lowe said.

That emphasis is in part a result of laws enacted in 2012 designed to keep EBT cards, along with other welfare benefits like Temporary Assistance for Needy Families, from being used at liquor stores, casinos and strip clubs.

Data from the USDA will be more complicated than state investigators can analyze with simple spreadsheets, Lowe said. Instead of responding to complaints and tips, they’ll be able to see patterns that can spark investigations.

“It will help us narrow our focus,” he said.