According to the Associated Press, a criminal swindle of the United States’ $64.7 billion food stamp program is playing out at small neighborhood stores around the country, where retailers are suspected of trading deals with customers, exchanging lesser amounts of cash for their stamps. Authorities say the stamps are then redeemed as usual by the merchants at face value, netting them profits and diverting as much as $330 million in taxpayer funds annually a year. But the transactions are electronically recorded and federal investigators are closely monitoring thousands of convenience stories and groceries in a push to halt the fraud.
Known as food stamp trafficking, the illegal buying or selling of food stamps is a federal offense that has resulted in 597 convictions nationwide and $197.4 million in fines, restitution, and forfeiture orders, over the past three years, according to the U.S. Department of Agriculture’s (USDA) Office of the Inspector General.
“It’s misuse of the program. It’s a misuse of taxpayer dollars at a tough time. Not only the people who need the program are having a tough time, but the people who are paying for the program are having a tough time, too,” said Kevin Concannon, USDA Undersecretary for Food, Nutrition, and Consumer Services. The fraud is almost always found among the 199,000 smaller stores that process 15% of the nation’s total food stamp transactions, Concannon said.
Nationwide, 234,000 stores are authorized to accept food stamps, including 35,000 supermarkets where 85% percent of benefits are redeemed. In 2010, 931 stores nationally were dismissed from the food stamp program for trafficking and 907 others were sanctioned for lesser violations—37% of the nearly 5,000 retailers being investigated.
The analytical tools officials are starting to pay off. Even though food stamp spending has ballooned from $22.7 billion to $64.7 billion since 1995, the misuse of benefits has dropped from four cents to a penny on every dollar spent, said Food and Nutrition Service spokesman Aaron Lavallee.