Supplemental Nutrition Assistance Program: Errors and Fraud

Supplemental Nutrition Assistance Program: Errors and Fraud

link to page 1 link to page 1

Updated September 24, 2018
Supplemental Nutrition Assistance Program: Errors and Fraud
The Supplemental Nutrition Assistance Program (SNAP) is
statute). This rate is not a measure of fraud. See Table 1 for
the nation’s largest domestic food assistance program,
recent rates and amounts. USDA-FNS developed new
serving over 42.1 million individuals in an average month
controls for FY2017 data collection that were not in place
at a federal cost over $68 billion in FY2017. SNAP benefits
in FY2014. The substantial increase to error rates in
may be used to buy eligible food at over 263,000 authorized
FY2017 may be misleading since FY2014 rates were
stores. SNAP is jointly administered by state agencies,
estimated under different procedures.
which handle recipient functions, and the U.S. Department
of Agriculture Food and Nutrition Service (USDA-FNS),
Table 1. Estimated SNAP Payment Error Rates and
which supports and oversees the states and handles retailer
Dollar Amounts, FY2012-FY2014, FY2017
functions. Policymakers discuss and debate errors and fraud
Estimated overpayment and underpayment amounts in billions
in SNAP; these can be complex concepts. This In Focus
summarizes the more-detailed CRS Report R45147, Errors

FY2012 FY2013 FY2014 FY2017
and Fraud in the Supplemental Nutrition Assistance
Overpay Rate
2.77%
2.61%
2.96%
5.19%
Program (SNAP).
Overpay
$2.07
$2.00
$2.07
$3.30
Types of SNAP Error and Fraud
Amount
Error and fraud can be organized into four main types:
Underpay Rate 0.65%
0.60%
0.69%
1.11%
1. Trafficking SNAP benefits—the illicit sale of
Underpay
$0.49
$0.46
$0.48
$0.71
SNAP benefits, which can involve both
Amount
retailers and recipients (a type of fraud).
NPER
3.42%
3.20%
3.66%
6.30%
2. SNAP retailer application fraud—an
Source: USDA-FNS Quality Control resources. Rates compare
ineligible store or owner’s illicit attempt to
overpayment/underpayment amounts to total SNAP benefits issued.
participate in SNAP.
National rates were not issued for FY2015 or FY2016.
3. Errors and fraud by households applying for
The National Retailer Trafficking Rate
SNAP—unintentional or intentional recipient
actions resulting in incorrect SNAP amounts.
Roughly every three years, the retailer trafficking rate
estimates the volume of benefits trafficked. The retailer
4. Errors and fraud by SNAP state agencies—
trafficking rate reflects a major form of SNAP fraud, but it
unintentional or intentional state agency
does not reflect all forms of fraud. See Table 2 for recent
actions resulting in incorrect SNAP amounts.
rates and amounts.
Errors versus Fraud
Errors are not the same as fraud. Fraud is intentional
Table 2. Estimated National Retailer Trafficking Rates
activity that breaks federal and/or state laws, while errors
and Dollar Amounts, FY2009-FY2014
are mistakes. Certain acts, such as trafficking, are always
Estimated trafficked amounts in billions
considered fraud, but other acts, such as duplicate
enrollment, may be either errors or fraud depending on the

FY2009-FY2011
FY2012-FY2014
circumstances of the case. SNAP fraud is rare, according to
all available data and reports, but there is no single data
Trafficking Rate
1.34%
1.50%
point that reflects all the forms of fraud in SNAP. Criminal
Trafficking Amount
$0.86
$1.08
prosecution of fraud, when pursued, is typically initiated by
Source: USDA-FNS trafficking studies. Rate compares estimated
USDA Office of the Inspector General (USDA-OIG) or
trafficking amounts to all SNAP benefits redeemed.
state law enforcement authorities.
Measures of Errors and Fraud in SNAP
Trafficking SNAP Benefits
USDA-FNS is responsible for identifying stores engaged in
There are two main measures of error and fraud in SNAP.
retailer trafficking—using transaction data analysis,
The National Payment Error Rate (NPER)
undercover investigations, and other tools—and punishing
Based on annual SNAP Quality Control reviews, the NPER
store owners. Retailers found to have trafficked may be
measures states’ improper issuance of SNAP benefits,
subject to permanent disqualification from participation in
including from recipient fraud, recipient errors, and state
SNAP, fines, and other penalties. Recipient trafficking is
agency errors. This rate reflects all overpayments and
considered an intentional program violation, and state
underpayments that exceed the error tolerance threshold
agencies are responsible for identifying—using social
($38 as of FY2017; per month in the sample month
media monitoring, transaction data analysis, and other
counted; threshold is inflation-adjusted annually per
tools—and punishing recipients who engage in this kind of
https://crsreports.congress.gov

Supplemental Nutrition Assistance Program: Errors and Fraud
fraud. Recipients found to have trafficked may be required
representative of a state agency. State agencies are
to repay the amount trafficked and may be subject to
responsible for preventing, identifying, and correcting
disqualification from receiving SNAP benefits and other
agency errors, including underpayments. As with any
penalties.
overpayment, a household that receives an overpayment
SNAP Retailer Application Fraud
resulting from an agency error is usually required to repay
the overpaid amount. In FY2016, state agencies attempted
Owners and stores applying to USDA-FNS to participate in
to collect $189 million in overpayments resulting from
SNAP must meet certain eligibility criteria. If applicants
agency errors.
provide false or misleading information of a substantive
nature, then they have committed retailer application fraud.
State Agency Employee Fraud
FNS identifies this kind of fraud through review of
State agency employee fraud is any intentional effort by
application materials. Retailers found to have falsified their
state employees to illegally generate and benefit from
applications may be subject to denial, permanent
SNAP overpayments. State agency employee fraud usually
disqualification, and other penalties.
involves eligibility workers who abuse their positions and
Error and Fraud by Households Applying access to the SNAP certification process in order to
for SNAP Benefits
unlawfully generate SNAP accounts.
Households applying for SNAP benefits must submit
State Agency Quality Control Data Issues, Fraud
personal information to their state agency for an eligibility
State agencies conduct Quality Control reviews of their
determination and benefit calculation. During this
SNAP caseloads and report these findings to USDA-FNS,
application process, applicants may unintentionally provide
which the federal agency uses to develop the NPER.
incorrect information or omit certain information by
USDA-FNS identified quality issues in most of these state-
accident. If this action results in an overpayment to the
submitted data for FY2015 and FY2016 and, as a result, did
household, then this is designated a recipient error. If the
not issue national rates in these years. These data quality
recipient is found to have intentionally broken SNAP rules
issues are not, in and of themselves, proof of wrong doing.
when applying, however, then they have committed fraud.
USDA-FNS examined states’ data and processes, revised
Recipient Errors
procedures, and in June 2018 released FY2017 national
This is considered an inadvertent household error, and state
payment error rates. In addition to the data issues, in 2017,
agencies are responsible for identifying this kind of error
the Department of Justice found at least three agencies
through careful analysis of the materials provided by
(Wisconsin, Virginia, and Alaska) to have actively falsified
applicants. As with any overpayment, a household that
their quality control data, mitigating rather than reporting
receives an overpayment resulting from a recipient error is
errors, to avoid penalties and acquire bonuses since at least
usually required to repay the overpaid amount. In FY2016,
FY2008. These three agencies have admitted to violations
state agencies attempted to collect $422 million in
of the False Claims Act and repaid a total of about $17
overpayments resulting from recipient errors.
million in fraudulently obtained bonuses. USDA-OIG
continues to investigate this in other states.
Recipient Application Fraud
Issues and Strategies
This is considered an intentional program violation, and
state agencies are responsible for identifying this kind of
Oversight entities, such as the Government Accountability
fraud through analysis of the materials provided by
Office and USDA-OIG, have identified issues and
applicants. Recipients found to have engaged in application
strategies relevant to combating errors and fraud in SNAP.
fraud (also called eligibility fraud) may be required to repay
USDA-FNS has also proposed related regulatory changes
the amount illicitly obtained and may be subject to
that were not finalized. On the retailer side, issues identified
disqualification from SNAP and other penalties. In
focus on opportunities to prevent and more promptly punish
FY2016, state agencies attempted to collect $73 million in
trafficking. On the recipient side, issues identified include
overpayments resulting from recipient trafficking and
that there is no recipient fraud rate, states vary in their
recipient application fraud.
efforts (and may be better incentivized) to pursue recipient
Error and Fraud by State Agencies
fraud, and data matching in the application process can be
improved. Examples of issues and strategies are discussed
SNAP state agencies are responsible for administering
further in CRS Report R45147, Errors and Fraud in the
SNAP on the recipient level in accordance with federal
Supplemental Nutrition Assistance Program (SNAP).
statute and regulation. In the course of conducting
eligibility determination and issuing benefits, state agencies
For SNAP Background
(and their agents) may commit inadvertent errors or
intentional fraud.
CRS Report R42505, Supplemental Nutrition Assistance
Program (SNAP): A Primer on Eligibility and Benefits.
Agency Error
When overpayment or underpayment is not the result of the
recipient’s actions (i.e., not recipient error or recipient
Randy Alison Aussenberg, Specialist in Nutrition
Assistance Policy
application fraud), then it is generally the result of an
agency error. Agency errors include overpayments or

underpayments caused by the action or inaction of any
IF10860

https://crsreports.congress.gov

Supplemental Nutrition Assistance Program: Errors and Fraud

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10860 · VERSION 5 · UPDATED