Combatting SNAP Fraud

On December 18th, the National Governors Association Children and Families team hosted the monthly Human Services Policy Advisors Institute with the American Public Human Services Association, Arkansas, and Michigan, where speakers discussed what states are doing to combat rising SNAP theft and fraud trends.

States and territories across the country have seen alarming increases in Supplemental Nutrition Assistance Program (SNAP) theft, reporting that thieves have stolen millions of dollars in benefits from vulnerable families. Between 2022 - December 2024, benefits stolen from families' or individuals' EBT cards were replaced by the federal government, a practice that ended in the winter of 2024, leaving states and territories to handle the turmoil as constituents lose vital support. Benefit theft has cost taxpayers millions of dollars: according to the Food and Nutrition Service's SNAP Replacement of Stolen Benefits Dashboard, 52 states and territories received almost $70 million in replacement benefits in Q4 of 2024, and more than $220 million in replaced benefits over the course of FY 23 and FY 24. As of December 2024, states and territories have been navigating how to maneuver, including how to manage referrals and assistance for SNAP recipients who have been targeted for theft.

Many states, including South Carolina, Oklahoma and California, have reported tracking theft to organized, and sometimes international, criminal enterprises that are preying on resources dedicated to nutrition supports. SNAP benefits delivered on Electronic Benefit (EBT) cards often lack critical security features, which make it easier for fraudsters to steal information. A federal pilot is underway in two states to provide updated, more-secure technology for these cards, but otherwise states and territories are hamstrung in their ability to combat the international criminal enterprises that are draining the SNAP coffers.

A recording of the meeting is available here. Please contact the Children and Families team for the password to access the recording.

Speakers

• Kara Williams, Policy Coordinator of Food and Nutrition Services, APHSA
• Jennifer Allen, Manager of the Benefit Tracking Unit with the Office of the Inspector General, Michigan Department of Health and Human Services
• Mary Franklin, Director of the Division of County Operations, Arkansas Department of Human Services

Highlighted State Strategies to Combat Fraud

• Building strong relationships with SNAP retailers can help reduce SNAP skimming or fraudulent portals
• Boosting public awareness and education about personal security measures can reduce fraud at the individual level, especially by encouraging frequent PIN changes and promotion strong PIN choices
• Implementing technological improvements, like transaction alerts for consumers or requiring two-factor authentication for access, supports improved security on the systems level
• Investing in data assessment and analysis programs can help detect and predict fraudulent charges
• Participating in USDA Pilot Programs to access flexibility to explore innovative tech solutions, like mobile payment, cross-state charge locks, and chip implementation

Discussion Takeaways

While Arkansas experienced an increase in SNAP fraud reports over the past few years, recent efforts have helped quell the surge:

• AR modified its contract with their EBT Vendor, Conduit, to include an Adaptive Fraud solution, at an additional administrative cost to the state
  • Solution allowed AR greater agility to take action to prevent, track, and block fraudulent calls
  • By the state's estimate, savings due to mitigated risk in replacing stolen SNAP benefits outweighs the increased administrative expense
  • AR also worked with Conduit to prevent the use of common and insecure PIN codes (like easy to guess pins like 1111)
• AR leveraged DHS' Communications team to develop and disseminate consumer education materials
  • Published a press release about efforts to combat fraud, capitalizing on media and news outlets to broadcast information, increasing public awareness of fraud risks

Michigan's greatest increases in fraud for 2024 were particularly stark between May and June-whereupon fraud rates stabilized

Michigan has a specific Benefit Trafficking Unit, which is responsible for identifying and investigating SNAP Fraud, reporting success working with retail partners to track EBT transactions, as well as commonly trafficked goods (like Red Bull or candy)

• Strong relationships with law enforcement organizations, federal partners, and local county jurisdictions have proven successful in combatting large scale clone card schemes
• A partnership with MI Attorney General's new Organized Retail Crime Unit Task Force interrupted a massive fraud scheme targeting big-box retailers
  • Built a query to perform daily review out-of-state activity, and review retroactive data for suspicious purchases
• Prosecuting cross-state benefits fraud and theft is difficult due to jurisdictional complications with law enforcement agencies
• States noted that establishing and improving relationships with similar agencies and units in peer states can facilitate expedited responses

APHSA Presentation Takeaways: APHSA shared information on the org's recent work to support human services staff in assessing and addressing SNAP fraud.

• In November of 2024, APHSA released a survey to human services advisors to assess state actions to increase SNAP security. While the survey is not public, Kara shared some themes from the results, including:
  • States are reporting a steep increase in SNAP fraud from 2022-2024
  • Human services agencies are building relationships with retailers and law enforcement agencies to leverage their abilities to help mitigate or prosecute fraud, but the success of these partnerships varies widely
  • States are investing in fraud detection, tracking, and analysis systems to better understand trends in real times
  • States use a variety of media, including websites, social media, or TV/radio to get educational materials to consumers
• Implementing EBT Security tools can be expensive, require a lot of staff/retailer capacity, and put additional tasks on overburdened state IT teams
• States are investigating what it takes to put chips in cards, but are concerned about cost, funding, and keeping up with modern technology