Skip to Content

Congress Should Consider These Five Fraud Prevention Reforms for Food Stamps

The Farm Bill, despite its name, isn’t just about farming. In fact, the largest part of the bill is related to food stamps.

Congress is working on this must-pass legislation this year, which makes now the perfect time to consider reforms to food stamps that challenge the status quo.

And the status quo is an administration that breaks everything it touches—especially the bank. With unilateral increases to the food stamp program, the Biden administration has spent billions of dollars, trapped more people in dependency, and violated decades-old agency protocols.

In a new paper for the Foundation for Government Accountability, senior research fellow Liesel Crocker highlights four examples of fraud—and five ways states and Congress can help prevent them from happening again. Check it out:

The bad news: four examples of fraud

#1: A 2021 investigation found that two Texas women exchanged cash for food stamps at a store owned by one of them. For five years, they made hundreds of fraudulent transactions linked to 83 different food stamp beneficiaries. They then sold all their purchases—which included a revolting 50 tons of American cheese—to a partner in Mexico, costing taxpayers $1.2 million.

#2: A Kansas City, Missouri woman used stolen identity information to file six separate applications for food stamps. She also filed for food stamps in four different states, totaling 71 applications. She would then sell the benefit cards for cash. She was sentenced to four years in prison.

#3: A food stamp recipient in Texas was making $60,000 per month through his gift card liquidation business yet failed to disclose that. Despite making $3 million over four years, he was also fraudulently receiving food stamps and Medicaid benefits.

#4: Three Michiganders were arrested for running a food stamp fraud ring that stole benefits from more than 8,000 people and used the data to create new EBT cards to make purchases, totaling $4 million in fraud.

The good news: These five reforms can help prevent fraud

#1: Prevent retailers from trafficking food stamp benefits.

Did you know that nearly 14 percent of all approved retailers engage in food stamp trafficking? According to the U.S. Department of Agriculture, this includes one in four small grocery stores and one in five convenience stores.

Retailers commit fraud by redeeming benefits at their own stores. Fortunately, Congress can easily help prevent this fraud by prohibiting owners or operators of retail food stores from redeeming their personal benefits at their own businesses.

#2: Crack down on prolonged out-of-state use of EBT cards.

Most states track EBT transactions, so states know when EBT cards are being used out of state and can use that information to crack down on abuses of the food stamp program.

There aren’t many reasons why food stamp enrollees should have to use their EBT cards outside of the state they live in. Often, the reason out-of-state transactions are occurring is because of someone moving and continuing to receive and abuse benefits from a state in which they no longer live.

In fact, Utah conducted an audit of their food stamp program and discovered there were hundreds of individuals using their EBT cards exclusively out of state for at least six months—including in Florida for 17 months, in Oklahoma for a year and a half, and in Missouri for three years. Less than two percent of these violations were flagged by the agency at the moment. Missouri’s audit results were unfortunately similar—thousands of people were found to be using their cards out of state, some for nearly two years. What makes this abuse of state food stamp programs even more problematic is that recipients receive benefits from their former state and their new state simultaneously for years at a time, wasting resources as well as taxpayer money from more than one state.

Through the Farm Bill, Congress could require states to suspend a household’s benefits when it makes purchases exclusively out of state for a period of 60 or more days until the state can investigate.

#3: Clarify and limit authorized users of EBT cards.

As the paper notes, currently, the presumption is that anyone who shows up at a retailer with a card is the legitimate user. There are no security features to prevent the theft of data, which is why in 2022 EBT data theft in California increased by 4,000 percent compared to 2021. In Los Angeles County, $25 million has been lost to stolen benefits in the first six months of 2023. Limiting authorized users can prevent the sale of food stamps for cash and theft of food stamps from innocent beneficiaries.

#4: Cross-check, cross-check, cross-check!

We are a nation of data. States spend a lot of money maintaining data in several different areas that contain information that can be used to identify fraudulent activity in state food stamp programs, including lottery winnings records, death records, child support data, pension data, wage records, employment records, new-hire data, incarceration records, and EBT transaction records.

All of that is great, useful information when it comes to preventing welfare fraud. States could be using this data comprehensively to weed out ineligible enrollees—but for some reason, many are not.

Congress could use the Farm Bill to make it mandatory for states to cross-check these readily available state and federal data lists against food stamp enrollee and applicant information to ensure resources are going to the truly needy.

#5: Require 10-day change reporting for all food stamp enrollees.

In her paper, Crocker notes that federal regulations give states two options for reporting changes that impact food stamp eligibility. “Simplified reporting” allows households to report only when their income rises above the federal income cap. “Change reporting” requires all changes in income and other eligibility factors to be reported within 10 days. Twenty-six states and territories only require food stamp enrollees to report changes if their income rises above the federal eligibility limits, and 25 states have a combination of simplified reporting and change reporting based on the type of household. Requiring enrollees to report any change in income or another eligibility factor within 10 days would ensure that people only receive benefits for which they are eligible.

At FGA, we don’t just talk about changing policy—we make it happen.

By partnering with FGA through a gift, you can create more policy change that returns America to a country where entrepreneurship thrives, personal responsibility is rewarded, and paychecks replace welfare checks.