	Background

Established as a national program in the mid 1970s, WIC is intended to  improve the health status of low-income pregnant and postpartum  women, infants, and young children by providing supplemental foods and  nutrition education to assist participants during critical times of growth and  development. National Data on Online Sales of WIC Infant Formula Are Unavailable, but Evidence Suggests Some Participants Attempt Them

USDA does not have data that can be used to determine the national  extent of online sales of WIC formula, and department officials told us that  USDA has not conducted a comprehensive study to assess these sales. Rather, they said, it is the  responsibility of state agencies to establish procedures to prevent and  address participant violations, including attempts to sell WIC food  benefits. According to state officials, states’ monitoring efforts have revealed some  WIC formula offered for sale online. Of the officials we spoke to from 12  states, those from 5 states said that they have found WIC formula offered  for sale online by participants. Consistent with these state accounts, our own monitoring of a popular e- commerce website for 30 days in four large metropolitan areas found few  posts in which individuals explicitly stated they were attempting to sell  WIC-provided formula. However, these posts did not state that the advertised formula was from  WIC, and while the formula offered for sale was generally consistent with  formula provided through WIC, we could not identify it as such. 1. 2. 2016.”
Through our monitoring efforts, and through interviews with USDA and  state and local WIC officials, we identified a number of key challenges  associated with distinguishing between WIC-obtained formula sales and  other sales:
Each state’s specific WIC-contracted formula brand is typically  available for purchase at retail stores by WIC participants and non- WIC participants alike, without an indicator on the packaging that  some were provided through WIC. Individuals posting formula for sale online are able to remain relatively  anonymous, so WIC staff may not have sufficient information to link  the online advertisement with a WIC participant. Advertisements for infant formula sales can be numerous online, and  formula for sale originates from varied sources. USDA Has Assisted States in Preventing and Addressing Online Sales, but Monitoring Guidance is Lacking

USDA has taken steps aimed at clarifying that the online sale of WIC  benefits is a participant violation. Although WIC regulations require that state agencies establish  procedures to control participant violations, we found that states vary in  whether their required procedures include informing participants of the  prohibition against selling WIC formula. In  our review of rights and responsibilities statements from 25 states’ WIC  policy and procedure manuals, we found that 7 did not require local  agency staff to inform participants that selling WIC benefits is against  program rules. USDA agreed with this recommendation, and in April  2015, department officials reported that they intend to revise WIC  regulations to require state agencies to include in participant rights and  responsibilities statements the prohibition against selling WIC food  benefits online. In addition, we found that states vary in the ways they identify attempted  sales of WIC formula through monitoring efforts, and USDA has not  collected information on states’ efforts to address these sales. However, the method  of monitoring and the level of effort devoted to this activity varied across  states. Because USDA does not require that state agencies  document their procedures for identifying participant sales of WIC foods,  including online sales of infant formula, USDA does not know whether or  how states are working to ensure program integrity in this area. We  recommended in our December 2014 report that USDA require state  agencies to articulate their procedures for identifying attempted sales of  WIC food benefits in their WIC state plans and analyze the information to  ascertain the national extent of state efforts. USDA and the states also lack information to determine cost-effective  approaches for monitoring these attempted sales. However, because the  use of the Internet as a marketplace has substantially increased in recent  years and the national extent of online sales of WIC food benefits is  unknown, USDA and the states have insufficient information to assess  the benefits of oversight efforts related to this participant violation. Because of this, we recommended in our December 2014 report that  USDA collect information to assess the national extent of attempted  online sales of WIC formula benefits and determine cost-effective  techniques states can use to monitor online classified advertisements. USDA agreed with this recommendation, and department officials  reported in April 2015 that they plan to explore ways to assess the extent  of online sales of WIC formula and identify and share best practices, cost- effective techniques, or new approaches for monitoring online  advertisements with state agencies. We believe this approach will help states to strike the appropriate  balance of costs and benefits when determining how to target their  program integrity resources.
Why GAO Did This Study

WIC provides supplemental foods—including infant formula—and assistance to low-income pregnant and postpartum women, infants, and young children. WIC regulations prohibit participants from selling the foods they receive from the program. However, the Internet has substantially increased as a marketplace in recent years, and news reports suggest that some participants have attempted to sell WIC formula online.
This testimony addresses: (1) what is known about the extent to which participants sell WIC formula online, and (2) USDA actions to prevent and address online sales of WIC formula. It is based on a December 2014 report, and includes April 2015 updates on actions USDA has taken to address the report's recommendations, which GAO obtained by analyzing USDA documents. For the 2014 report, GAO reviewed relevant federal laws, regulations, and USDA guidance; monitored online advertisements to sell formula in four metropolitan areas; reviewed a non-generalizable sample of policy manuals from 25 states, selected for their varied WIC caseloads and geography; and interviewed USDA and state and local officials.

What GAO Found

The U.S. Department of Agriculture (USDA) does not have data to determine the national extent of online sales of infant formula provided by the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Nevertheless, state WIC officials and GAO's own limited monitoring suggest that some WIC participants have offered formula for sale online. Of the officials we spoke with in 12 states, those from 5 states said that they have found WIC formula offered for sale online by participants. GAO monitored one online classified advertisements website in four large metropolitan areas for 30 days and found 2 posts in which individuals attempted to sell formula specifically identified as WIC—from among 2,726 that advertised infant formula generally. A larger number, 481 posts, advertised formula generally consistent with the formula brand, type, container volume, and amount provided to WIC participants, but these posts did not indicate the source of the formula. Because WIC participants purchase the same formula brands and types from stores as non-WIC customers, monitoring attempted online sales of WIC formula can present a challenge. State officials GAO spoke with cited other challenges to monitoring online sales, such as the fact that individuals posting formula for sale online are able to remain relatively anonymous, and their posts may contain insufficient information to allow staff to identify them as WIC participants.
USDA has taken some steps toward helping states prevent and address online sales of WIC formula but has not collected information that could assist states in determining cost-effective approaches for monitoring such sales. In December 2014, GAO found that USDA had not specifically directed states to tell participants that selling WIC formula was a participant violation, which could have led to participants making these sales without realizing doing so was against program rules. GAO also found that states were not required to report their procedures for controlling participant violations—including sales of WIC benefits—to USDA, leaving the department without information on state efforts to ensure program integrity in this area. Through interviews with state and local WIC agency officials from 12 states, GAO found that states varied in the method and level of effort devoted to monitoring these sales and lacked information to determine cost-effective approaches for monitoring. Without information on the national extent of online sales of WIC benefits or effective monitoring techniques, both USDA and the states are unable to target their resources effectively to address related risks. As a result, GAO recommended that USDA require state agencies to inform participants of the prohibition against selling WIC formula and describe to USDA how they identify attempted sales. GAO also recommended that USDA collect information about the national extent of attempted online sales of WIC formula benefits and determine cost-effective techniques states can use to monitor them. In response, USDA issued revised guidance in April 2015 stating that it expects states to (1) inform participants that selling WIC benefits violates program rules and (2) report their procedures for monitoring attempted WIC benefit sales to USDA. Also in April 2015, USDA officials reported that although they had not yet taken action to assess the national extent of online sales and determine cost-effective techniques to monitor them, they planned to explore ways to do so.

What GAO Recommends

GAO recommended, in December 2014, that USDA better ensure WIC participants are aware of the prohibition against selling formula, require states to describe how they identify attempted sales, and assess online sales, including techniques for monitoring. USDA agreed, has taken some action, and plans to do more.