Report: Food stamps trafickking drops but still costly

Friday, October 20, 2006 5:52 PM CDT

WASHINGTON (AP) — Food stamp recipients and retail stores illegally exchange hundreds of millions of dollars in benefits for cash instead of food, congressional investigators said Friday.

Known as trafficking, the practice has dropped sharply since the government switched from paper coupons to cards that work like debit cards. But trafficking still consumes $240 million a year, the Government Accountability Office said.

The study shows major progress, said Iowa Sen. Tom Harkin, senior Democrat on the House Agriculture Committee.

“Shifting from paper coupons to electronic delivery, which I’ve advocated for, means trafficking is at minimal levels,” Harkin said. “But we must continue to work to eliminate the program error and fraud that still exists.”

Typical offenders are small grocery and convenience stores, where the rate of trafficking is more than 7 cents per dollar, while in large stores the rate is 0.2 cents per dollar, the report said.

Those smaller stores are exploiting the government’s desire to reach people in places where there aren’t many supermarkets, GAO said.

“Field office officials told us their first priority is getting stores into the program to ensure needy people have access to food,” the report said. “And therefore, they sometimes authorize stores that stock limited food supplies but meet the minimum requirements.”

Five years might pass before the government checks a store again, the report said.

To fight the problem, the Agriculture Department needs to identify stores most likely to traffic and do more oversight early on, GAO said.

Today, a penny of every dollar of benefits is trafficked, a rate that has declined from nearly 4 cents a decade ago, GAO said.

Investigations have also declined, leaving many retailers to traffic without fear of severe criminal penalties, the report said.

Trafficking investigations, done by the Agriculture Department’s inspector general, dropped from 179 in 2000 to 77 last year, GAO said. The number of cases referred for federal prosecution dropped, too, GAO said.

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