Obama administration targeting food stamp fraud as program reaches record highs

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With more Americans relying on the program, the Obama administration on Tuesday plans to announce new steps to crack down on SNAP fraud amid estimates suggesting as much as $753 million in federal food aid is spent fraudulently each year.

USDA plans to introduce what officials described as “severe penalties” for the illegal “trafficking” of SNAP benefits by retailers and beneficiaries. The officials, who were not authorized to speak publicly on the issue in advance of this afternoon’s formal announcement, did not detail the severity of the penalties.

About 230,000 retailers nationwide participate in the SNAP program, with about 80 percent of funds spent at larger grocery chains. But officials said several smaller retailers often fraudulently obtain PIN or card numbers from program beneficiaries and keep the funds without the person’s knowledge. In the last decade, USDA has disqualified more than 8,300 retailers for such fraud, officials said.

In other cases, beneficiaries who receive monthly deposits of food aid on to plastic cards similar to bank cards intentionally use SNAP benefits to purchase water or other beverages with bottle deposits, dump the liquid and then obtain cash for bottle deposits. Others attempt to sell SNAP benefits in exchange for cash on Craigslist and social media sites.

full: http://www.washingtonpost.com/blogs/federal-eye/post/obama-administration-targeting-food-stamp-fraud-as-program-reaches-record-highs/2011/12/05/gIQAfdM3XO_blog.html