Report: Widespread National Food Stamp Fraud Totals at Least $1 Billion

According to a new report produced by the Government and Accountability Office (GAO), at least $1 billion in food stamp benefits are "trafficked annually," meaning they are fraudulently used. The extent of the fraud is uncertain, the GAO warns, estimating the abuse of the program could be as high as $4.7 billion.

About 20 million lower-income households receive benefits from the $64 billion Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, to buy food. But GAO found that instead of being used for food, many stores are defrauding the program by "selling" cash instead of food.

"For example, a store might give a person $50 in exchange for $100 in benefits – then pocket the difference," GAO explains.

The Food Nutrition Service (FNS) within the U.S. Department of Agriculture oversees SNAP and is responsible for authorizing and overseeing retailers.

The fraud, known as "retailer trafficking," costs taxpayers at least $1 billion. However, the real cost could be "anywhere from $960 million to $4.7 billion," the GAO adds.

The Foundation for Government Accountability (FGA), a Washington, D.C.-based think tank advocating reform, launched a "Stop the Scam initiative" to raise awareness of the widespread problem.

"Welfare fraud is one of the biggest untold stories of the last decade, robbing resources from the truly needy and eroding public trust in the integrity of our welfare programs," Sam Adolphsen, vice president of executive affairs at FGA, said in a statement. "While the bad-actor food stamp retailers exposed in this GAO report are in part to blame, we must not lose sight of the accountability that falls upon the food stamp recipient willing to commit fraud and abuse the system."

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