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What are common types of SNAP fraud?
Executive summary
Common types of SNAP fraud include trafficking (selling benefits for cash or ineligible items), application/eligibility fraud (lying about income, identity, household composition), retailer fraud (rings, skimming, misreporting transactions), and internal/state-agency or employee abuse; federal analyses and CRS reviews list these as the core categories [1] and note trafficking is always fraud while some acts (e.g., duplicate enrollment) can be error or fraud depending on intent [2]. USDA and state materials emphasize identity-related fraud and EBT card theft/cloning as growing challenges; one industry study found identity-related fraud present in about 31% of reported cases [3] and reporting shows rising incidents of EBT theft and skimming [4].
1. Trafficking: the headline theft that involves both retailers and recipients
Trafficking — exchanging SNAP benefits for cash, drugs, tobacco, or other ineligible items — is singled out across federal and state sources as a clear, prosecutable form of fraud and often involves both individual recipients and complicit retailers; USDA, CRS, and state prosecutors describe schemes where benefits are cashed out or purchases are disguised to hide ineligible items [1] [5] [2]. Cato’s review of prosecutions highlights large trafficking rings and resale operations — for example, cases where benefits converted into resold goods generated millions in illicit receipts [6].
2. Application and recipient fraud: lying about eligibility
Application fraud covers lying about income, assets, identity, or household size to obtain or keep benefits. Federal guidance and legal summaries state that misrepresenting identity or failing to report income can lead to disqualification or criminal charges; the USDA and many state agencies emphasize fraud prevention tools for detecting these abuses [7] [2]. Local enforcement pages list identity misrepresentation and unreported income as common triggers for investigations [8].
3. Retailer-side schemes: rings, skimming, and false transactions
Retailer fraud ranges from outright trafficking by stores to more technical schemes such as ring operations where transactions are structured to disguise ineligible sales, and EBT-card skimming or cloning that steals card numbers for resale or cash-out. The USDA and state prosecutors investigate retailers via specialized units, and reporting indicates retailers can both facilitate and directly profit from trafficking schemes [5] [9]. News reporting and federal data on rising skimming/cloning incidents show retailers and card security vulnerabilities are an important front in anti-fraud work [4].
4. Identity, EBT theft, and technological exploitation
Identity-related fraud and EBT-card compromise are recurrent themes: LexisNexis’s industry study found identity-related fraud in 31% of cases for SNAP agencies, and news accounts report substantial increases in fraudulent EBT transactions and card cloning incidents in recent quarters [3] [4]. USDA and state fraud pages document stolen or skimmed cards, misused account numbers, and schemes that manipulate electronic systems as modern avenues for benefit theft [7] [8].
5. State-agency and employee fraud, plus duplicate/enrollment errors
Fraud can also originate inside administration: state employees abusing certification processes or creating fraudulent accounts are documented concerns, and CRS reporting highlights state-agency employee fraud as a distinct category [2] [1]. The Congressional review also cautions that some issues, like duplicate enrollment, can be either honest error or intentional fraud depending on the facts — underscoring the need for careful case-by-case investigation [2].
6. Scale, detection, and competing perspectives on prevalence
Federal material stresses that while fraud exists, most recipients are eligible and payment accuracy has improved — USDA reports payment accuracy at historic highs and notes that over 98% of participants are eligible [9]. At the same time, policy analysts (e.g., Cato) and industry studies emphasize billions lost over time and point to organized rings and retailer collusion as significant problems [6] [3]. CRS cautions there’s no single data point capturing all fraud types, meaning estimates vary depending on which categories (e.g., trafficking vs. administrative error) are counted [2].
7. Penalties, prevention tools, and reporting routes
Penalties for SNAP fraud range from disqualification and claims collection to criminal prosecution and fines under federal law (Title 7 U.S.C. sections summarized in legal guides), and USDA/FNS highlight tools like the SNAP Fraud Framework, data analytics, specialized investigations, and state recertification to detect and deter fraud [10] [7] [9]. States and counties publish hotlines and claim forms for victims of theft and for reporting suspected fraud, indicating a decentralized enforcement system [8] [11].
Limitations: available sources do not provide a single up-to-date national dollar total for all SNAP fraud types; reporting and estimates differ by agency and methodology [2] [9].