Supplemental Nutrition Assistance Program:

Enhanced Detection Tools and Reporting Could Improve Efforts to Combat Recipient Fraud

GAO-14-641: Published: Aug 21, 2014. Publicly Released: Aug 21, 2014.

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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.

Figure 1: Using Replacement Cards to Target Trafficking in Michigan, Fiscal Year 2012

Figure 1: Using Replacement Cards to Target Trafficking in Michigan, Fiscal Year 2012

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.

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 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.

For more information, contact Kay E. Brown at (202) 512-7215 or brownke@gao.gov, or Seto J. Bagdoyan at (202) 512-6722 or bagdoyans@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FNS officials reported that, in 2014, the agency published a Request for Information in the Federal Register to solicit state and other stakeholder input on how they can more effectively incentivize states to improve overall performance, including in the area of program integrity. Specifically, the request asked for input on how new bonus award categories that recognize strong program integrity efforts could be implemented as well as what should be the minimum level of performance across all program areas. However, while FNS explored possible alternative financial incentives to support anti-fraud activities through the Request for Information and review of responses, based on the responses FNS officials reported that the agency has not moved to create additional bonus awards for anti-fraud and program integrity efforts.

    Recommendation: The Secretary of Agriculture should direct the Administrator of FNS to explore ways that federal financial incentives can better support costeffective state anti-fraud activities.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: FNS officials reported that, in September 2013, they awarded a contract to provide expert business consultation and technical assistance in the area of recipient fraud prevention and detection to 7 states as part of a pilot project. It eventually expanded to include 3 more states. The purpose of the contract was to improve how effectively states were able to identify and investigate recipients suspected of trafficking SNAP benefits, including through the use of predictive analytics involving transaction and replacement card data to uncover potential recipient trafficking. In May 2018, FNS released its SNAP Fraud Framework, which incorporates the results of the pilot project and provides guidance to states on improving fraud prevention and detection using various approaches, including the use of data on excessive card replacements as potential indicators of fraud. FNS officials also provided documentation of training it conducted in the fourth quarter of fiscal year 2016 to teach state technical staff on how to build predictive models that incorporate the use of replacement card data.

    Recommendation: The Secretary of Agriculture should direct the Administrator of FNS to 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.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: FNS officials reported that, in 2016, the agency conducted additional analysis to evaluate states' current use of social media in their detection of SNAP trafficking and develop a proof of concept for the use of market-leading tools to assist states in more efficient monitoring. In May 2018, FNS released its SNAP Fraud Framework to provide guidance to states on improving fraud prevention and detection by using, among other things, a Social Media Research and Maturity Model. In addition, the Supplemental Materials to the Framework provides a case study on how to use social media and data analytics to detect and investigate fraud.

    Recommendation: The Secretary of Agriculture should direct the Administrator of FNS to 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.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Implemented

    Comments: FNS officials reported that, based on recommendations from a national working group and input provided through a Request for Information in the Federal Register, they redesigned the form used to collect recipient integrity performance information. The revised form was approved by the Office of Management and Budget in June 2016 and implemented in fiscal year 2017. FNS officials also reported providing training to approximately 400 state agency and FNS regional office personnel on the updates to the form and related instructions. FNS published an Interim Final Rule on January 26, 2016, changing the reporting frequency of the FNS-366B from an annual to quarterly submission. The quarterly requirement became effective in FY 2017.

    Recommendation: The Secretary of Agriculture should direct the Administrator of FNS to take steps, such as guidance and training, to enhance the consistency of what states report on their anti-fraud activities.

    Agency Affected: Department of Agriculture

 

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