Government over-payment of food stamp benefits cost taxpayers a minimum of $11.2 billion in fiscal year 2022, according to a recent report from the Foundation for Government Accountability (FGA).
This is the highest amount that has ever been lost due to over-payment in the history of the program. In 2019, this figure was just $3.4 billion.
Based on FGA research, nearly 80 percent of these over-payments are the result of errors at the state level, including overlooking fraudulent uses of the program.
In their report, FGA recounts several recent incidents of food stamp fraud that resulted in the loss of millions of taxpayers’ dollars.
One such incident was uncovered in 2021. From 2014 to 2019, two women in Texas had been exchanging food stamps for cash, using the stamps to purchase 50 tons of American cheese, 22 tons of beans, and more than 5,000 gallons of mayo.
The products purchased with the stamps were then sold to a buyer in Mexico.
FGA also highlights a case wherein a food stamp recipient was discovered to have been earning roughly $60,000 a month from his “gift card liquidation business.”
To combat fraud like this, as well as other less dramatic abuses of the food stamp system, FGA proposed five solutions for lawmakers to consider.
First, they suggest prohibiting owners and employees from redeeming benefits at their own store in order to cut down on the exchange of food stamps for cash or ineligible items.
Secondly, FGA suggests suspending a recipients benefits if exclusively out-of-state purchases are made for 60 consecutive days.
FGA then recommends clarifying and limiting who can serve as an authorized user of an EBT card, as opposed to the current system wherein anyone who presents an EBT card at the time of purchase is presumed to be an authorized user. They argue that this would cut down on EBT card theft, as well as the illegal sale of these cards.
Fourth, FGA suggests requiring states to conduct regular, automatic eligibility checks by cross-referencing food stamp application information with preexisting state records. According to FGA, such cross-checking would help ensure that all those receiving benefits are genuinely in need of them.
Lastly, it is recommended that “10 day change reporting” be adopted across the board. This would mean that instead of simplified reporting — wherein recipients are only required to tell the government if their income rises above the eligibility cap — food stamp beneficiaries would need to disclose any changes to their income within 10 days.
Currently, some states have only require simplified reporting, others only have 10 day change reporting, and 25 states employ a combination of the two.
“Congress should require more robust program integrity reforms to ensure that criminals cannot take advantage of food stamps, and resources are preserved for the truly needy,” FGA wrote in conclusion.
Click here to read the full FGA report.