Selected States Employed a Range of Tools to Detect Fraud, but Conducted Investigations with Limited Staff and Pursued Cases with Mixed Success

The 11 states we reviewed employed a range of detection tools, but  experienced mixed success in combating SNAP fraud. Specifically, all 11 states that we reviewed had fraud hotlines or  websites, and all matched information about SNAP applicants and  recipients against various data sources to detect those potentially  improperly receiving benefits, as FNS recommended or required. Most of the Selected States Reported Difficulty Conducting Fraud Investigations Due to Limited Staff and Growing Numbers of Recipients, but Some Leveraged Additional Resources

The size and organization of the investigative units differed among the 11  states we reviewed, with wide variation in the number of staff available to  investigate potential SNAP recipient fraud. In light of their increased SNAP caseload, some officials suggested  changing the incentive structure to help states address the costs of  investigating potential SNAP fraud. Our testing found the recommended e-commerce monitoring tool less  effective than manual searches in detecting postings indicative of  potential trafficking, and we found the tool for monitoring social media to  be impractical for states due to the volume of irrelevant data. In 2014,  FNS finalized a rule that requires states to monitor replacement card data  and send notices to those SNAP households requesting excessive  replacement cards, defined as at least four cards in a 12-month period. SNAP  benefits are allotted on a monthly basis, and a recipient who is selling the  benefits on their EBT card and then requesting a replacement card would  generally have only one opportunity per month to do so. As a result,  additional replacement card requests in the same benefit period may not  indicate increased risk of trafficking. FNS Increased Its Oversight of State Anti-Fraud Activities but Lacks Reliable Data on These Efforts

FNS has recently issued regulations and guidance and conducted a  national review of state anti-fraud activities as part of its increased  oversight. Despite these efforts, FNS does not have consistent and  reliable data on state anti-fraud activities, primarily because its guidance  to the states on what data to report is unclear. Partially in response to public concerns, the Secretary for Food,  Nutrition, and Consumer Services asked states to renew their efforts to  combat SNAP recipient fraud, and since then FNS promulgated new  regulations and provided additional guidance to direct states in these  efforts. Among other topics, these studies are to explore strategies  for improving fraud detection. Specifically, in  fiscal year 2009, one state had about 40,000 recipient households, but  reported about 50,000 investigations. For example, even though GAO has found preventative efforts  to be the most efficient and effective means to address fraud and may  stop ineligible people from receiving benefits that may not be fully  recovered, state officials said the current fraud-related incentive is  focused on collecting overpayments. Recommendations for Executive Action

The Secretary of Agriculture should direct the Administrator of FNS to  take the following four actions:
Explore ways that federal financial incentives can better support cost- effective state anti-fraud activities;
Establish additional guidance to help states analyze SNAP transaction  data to better identify SNAP recipient households receiving  replacement cards that are potentially engaging in trafficking, and  assess whether the use of replacement card benefit periods may  better focus this analysis on high-risk households potentially engaged  in trafficking;
Reassess the effectiveness of the current guidance and tools  recommended to states for monitoring e-commerce and social media  websites, and use this information to enhance the effectiveness of the  current guidance and tools; and
Take steps, such as guidance and training, to enhance the  consistency of what states report on their anti-fraud activities. FNS also  reported that its commissioned studies will help inform its efforts to assist  states in developing better recipient fraud detection tools, including  potentially issuing new related guidance. Appendix I: Objectives, Scope and Methodology

The objectives of this report were to review the following: (1) how  selected state agencies combat SNAP recipient fraud; (2) the  effectiveness of certain fraud detection tools recommended to states,  including benefit card replacement data and e-commerce and social  media website monitoring; and (3) FNS’s oversight of state anti-fraud  efforts. We then obtained fiscal year 2012 transaction data from FNS for  those households that received excessive replacement cards. Supplemental Nutrition Assistance Program: Payment Errors and  Trafficking Have Declines, but Challenges Remain.
Why GAO Did This Study

In fiscal year 2013, SNAP, the nation's largest nutrition support program, provided about 47 million people with $76 billion in benefits. Fraud, including trafficking—the misuse of program benefits to obtain non-food items—has been a long-standing concern, and technology has provided additional opportunities to commit and combat such activities. State agencies are responsible for addressing SNAP recipient fraud under the guidance and monitoring of FNS. GAO was asked to review state and federal efforts to combat SNAP recipient fraud.
GAO reviewed: (1) how selected state agencies combat SNAP recipient fraud; (2) the effectiveness of certain state fraud detection tools; and (3) how FNS oversees state anti-fraud efforts. GAO reviewed relevant federal laws, regulations, guidance, and documents; interviewed officials in 11 states; interviewed federal officials; tested fraud detection tools using fiscal year 2012 program data; and monitored websites for potential trafficking online. Although results are not generalizable to all states, the 11 states, selected based on various criteria including the size of their SNAP recipient household population and their payment error rates, served about a third of SNAP recipient households.

What GAO Found

The 11 states GAO reviewed employed a range of detection tools, but experienced mixed success investigating and pursuing cases to combat potential Supplemental Nutrition Assistance Program (SNAP) recipient fraud. States reported using detection tools required or recommended by the Food and Nutrition Service (FNS), such as matching recipient data against prisoner and death files. However, most of selected states reported difficulties in conducting fraud investigations due to either reduced or maintained staff levels while SNAP recipient numbers greatly increased from fiscal year 2009 through 2013. Some state officials suggested changing the financial incentives structure to help support the costs of investigating potential SNAP fraud. For example, investigative agencies are not rewarded for cost-effective, anti-fraud efforts which prevent ineligible people from receiving benefits at all.
GAO found limitations to the effectiveness of recommended replacement card data and website monitoring tools for fraud detection. FNS requires states to monitor SNAP households that request at least four cards per year, but selected states reported limited success detecting fraud this way. GAO's analysis found potential trafficking in 73 percent of households reviewed by focusing on SNAP households requesting cards in at least four monthly benefit periods. Benefits are allotted monthly, and a recipient selling their benefits and then requesting a new card would generally have one opportunity per month to do so. As a result, additional card requests in the same benefit period may not indicate increased risk of trafficking. Additionally, GAO found the FNS recommended e-commerce website monitoring tool to be less effective than manual searches in detecting posts indicative of SNAP trafficking. GAO found the recommended tool for monitoring social media to be impractical due to the volume of irrelevant data.
FNS has increased its oversight of state anti-fraud activity in recent years by issuing new regulations and guidance, conducting state audits, and commissioning studies on recipient fraud since fiscal year 2011. Despite these efforts, FNS does not have consistent and reliable data on states' anti-fraud activities because its reporting guidance lacks specificity. For example, the guidance from FNS did not define the kinds of activities that should be counted as investigations, resulting in data that were not comparable across states. Additional oversight efforts, such as providing guidance to states for reporting consistent data, could improve FNS's ability to monitor states and obtain information about more efficient and effective ways to combat recipient fraud.

What GAO Recommends

GAO recommends, among other things, that FNS reassess current financial incentives and detection tools and issue guidance to help states better detect fraud and report on their anti-fraud efforts. Agency officials agreed with our recommendations.