Oh SNAP – Beating Back $750 Million of EBT Fraud, Waste and Abuse

Brian Dugan
Senior Vice President, Emerging Commerce Group Executive
Posted on August 2, 2016

fraud

Benefits fraud has declined during the past few years according to the USDA. That said, its most recent estimate of one percent fraud, waste and abuse for the $75 billion SNAP program amounts to a sizable $750 million worth of waste – money that should be used to feed those in need and their children.

No legislator or benefits program administrator wants to gain a reputation as the sleeping watchdog. Now there is no reason for agencies responsible for benefits programs to feel the impact of finger pointing. Proven technologies are now available to combat fraud, waste and abuse in the system.

A common benefits fraud scheme known as “trafficking” reads like this: Benefits holders sell their cards to merchants in exchange for cash – e.g., 30 to 50 cents on the dollar – and then merchants pocket the difference.

Two contrasting situations recently in the news regarding benefits programs demonstrate two ends of the spectrum in combatting fraud. In one scenario, an Arizona state representative first voted against welfare fraud protections. Later, she was caught committing welfare fraud and charged with unlawful use of food stamps, fraudulent schemes and practices, as well as theft.

Contrast that sad and embarrassing scenario with recent high-profile arrests in Florida. Ten different agencies at the federal, state and local levels, ranging from the local sheriff to the U.S. District Attorney, collaborated to take down 22 retailers at a south Florida flea market.  The 22 merchants were trafficking in food stamps and stolen identities while swindling the government out of $13 million. The U.S. Attorney for the Southern District of Florida proclaimed the discovery as the largest food stamp take down in history.

In order to achieve this level of success, legislators must grant financial support for efficient tools capable of providing the information that agencies need to thwart fraud and build cases against perpetrators.

If you are in charge of evaluating tools, you need to ask three questions to make sure the investment is justified:

  1. Do the tools have workflow capabilities with appropriate data reporting? This feature enables multiple parties access to the same information, which, in turn, fosters collaboration, reduces inefficiencies in investigations and allows teams to build collective cases against fraudsters.
  1. Do the tools have a rules-based engine? This features enables learning from buying behaviors related to fraudulent activities. For example, a rules-based engine can flag high levels of transactions from beneficiaries making purchases outside of their usual trading area when more convenient places to buy the same goods are widely available.
  1. Do the tools have real-time detection capabilities in the stream of the transaction flow? This feature can block fraudulent transactions at the time they occur. It also can be utilized by investigators to observe and monitor transactions in real-time in order to build a strong case against fraudsters.

Take action now to evaluate this new generation of fraud-fighting tools. See firsthand how they can dramatically improve your agencies’ chances of success in identifying and prosecuting perpetrators of fraud, waste and abuse.  What steps do you plan to take?

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Brian Dugan
Senior Vice President, Emerging Commerce Group Executive

Brian has overall responsibility for all Prepaid and Loyalty businesses in FIS with 25 years of experience in Fintech and financial services. Most recently the GM of Prepaid EBT, he doubled the size of the business and moved it into the #1 market position. Brian’s passion for change and driving results was influential in other senior management positions in corporate strategy, M&A, sales, and relationship management. Brian began his career at Deloitte & Touche and Ernst & Young.