FoodShare Fraud – Fact vs. Fiction
What is FoodShare fraud?
Fraud happens in FoodShare in three distinct ways:
All FoodShare fraud is illegal. It is punishable under the law.
Client fraud has been declining in Wisconsin for the last six years and is at its lowest level since the fiscal year 2003. According to the USDA, there were 58 “intentional program violation claims” established in fiscal year 2010, down from 164 in 2003. In contrast, in 2010 there were 1,742 “inadvertent household error claims” established which is down from 5,187 in 2003. The vast majority of errors made by clients are unintentional. According to the Department of Health Services (DHS), out of all overpayments made to FoodShare clients in 2010, three-quarters of the overpayments were due to state/agency error or unintentional client error. DHS also reports that only 22% of all FoodShare errors in the last five years were due to client error. The rest of the errors were committed by state or county workers.
The DHS does not have information on the prevalence of Quest card trafficking by FoodShare recipients.
Worker errors have been declining in Wisconsin for the last decade. Worker errors, measured by the “payment error rate,” have decreased from 12.69 percent in 2002 to 1.93 percent in 2010. In other words, about 98% of FoodShare cases were handled correctly in 2010.
Wisconsin’s error rate was the third-best in the U.S. in 2009, and because of its performance the state recently received over $3.3 million in performance bonus awards from the USDA. The state also received an additional $900,000 performance bonus for its improved participation rate in 2008.
The state has accomplished this error rate improvement at a time when the number of FoodShare cases doubled between 2005 and 2010. State policy improvements such as expansion of categorical eligibility, phone interviews and simplifying reporting of changes have played a major role in reducing the number of worker tasks and improving the error rate.
According to a March 2011 report by the USDA, retail fraud has remained stagnant over the last decade. The report notes that retail trafficking diverted an estimated $330 million annually from Supplemental Nutrition Assistance Program (SNAP) benefits between 2006 and 2008. About 8% of all retail stores in the U.S. trafficked during this time period. Large stores (like Pick N’ Save, Woodman’s, WalMart) account for 87% of all SNAP redemptions, but they account for only 5% of trafficking redemptions. Trafficking is much less likely to occur among publicly owned than privately owned stores, and is much less likely among stores in areas with less poverty rather than more. Nationally, the annual total value of trafficked benefits has increased, but the rate is about the same as overall SNAP growth.
According to a 2010 General Accounting Office (GAO) report, the Food and Nutrition Service (FNS) estimates that the national rate of SNAP trafficking declined from about 3.8 cents per dollar of benefits redeemed in 1993 to about 1.0 cent per dollar from 2002 through 2005. Trafficking scams and the sale of unauthorized items are usually investigated by federal officials. Approximately ninety investigations occur in Wisconsin each year, according to the USDA.
To read or print the entire report, click here.
If you have questions please contact Staci O'Brien Hunger Task Force Educator (414) 238-6470 or via email.