U.S.
5:33 pm
Thu March 8, 2012

House Committee Urges Action On Food Stamp Fraud

Originally published on Thu March 8, 2012 6:11 pm

With more than 46 million recipients, the food stamp program has become one of the government's biggest benefit programs.

It has also become one of the biggest targets for those who think the federal government isn't doing enough to prevent fraud.

At a Thursday hearing in Washington, lawmakers complained that some retailers who illegally deal in food stamp benefits have been allowed to stay in the program.

Before the hearing even began, the House Oversight and Government Reform Committee posted a slick video on its website that strung together recent news reports about stores illegally exchanging food stamp benefits for cash and liquor.

Committee Chairman Darrell Issa, a California Republican, asked the Agriculture Department official in charge, Kevin Concannon, to respond to a recent Scripps Howard News Service investigation that found numerous store owners accepting food stamp benefits after they had supposedly been barred from the program.

"These companies and these individuals behind these companies need to be punished on a consistent basis," Issa said. "If in fact they are suspended, it needs to be for a period of time, with an understanding of whether or not they are ever going to be able to sell again."

Concannon admitted that some dishonest retailers had slipped through the cracks. But he said it was rare and that, in fact, overall food stamp fraud is down from about 4 cents on the dollar 15 years ago, to 1 cent today. He credited, in part, today's use of plastic benefit cards, which are more traceable than the paper stamps recipients used to get.

"In the era of paper coupons it was much more widespread," Concannon said. "The electronic benefit card has considerably brought that down — that and other work with states."

Concannon cited a recent USDA study that showed food stamp fraud rates were down to 1 percent, which he called one of the lowest fraud rates in the government. But 1 percent of a $70 billion program is still a lot, and witnesses told the panel that those who seek to defraud the program are getting increasingly creative.

"Most recently we've seen situations where there have been runners employed who will take cards from recipients and take them to many different retailers and swipe those cards to get benefits," said USDA Inspector General Phyllis Fong. "There will be maybe a group of retailers who work together to do this."

Those retailers can sometimes make hundreds of thousands of dollars off the scheme. According to Concannon, the department is beefing up law enforcement and has barred more than 8,000 stores from the program. Still, he said, the overwhelming majority of participating stores are honest.

Rep. Gerry Connolly, D-Va., said that like other Democrats on the panel, he's concerned about fraud, but he questioned whether Republicans are trying to build a case for benefit cuts, which some have proposed.

"It's good that this committee is having this hearing to absolutely highlight there are still problems, and our goal should always be to get it to zero," Connolly said of the fraud rate. "But let's not overstate the problems, and let's not lose sight of the mission, especially at budget time when some people might be thinking of a $100 billion cut in the program."

Still, Chairman Issa said taxpayers need to know that their money has been well spent.

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Transcript

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

ROBERT SIEGEL, HOST:

I'm Robert Siegel. The U.S. Food Stamp Program is one of the biggest in the social safety net. It provides benefits to more than 46 million people. It's also become a big target for people who think the federal government isn't doing enough to prevent fraud.

NPR's Pam Fessler tells us about a hearing today on Capitol Hill, where lawmakers complained about retailers who illegally deal in food stamp benefits.

UNIDENTIFIED MAN: Food stamp fraud: It is costing Americans millions in taxpayer money.

PAM FESSLER, BYLINE: Even before the hearing began, the House Oversight Government Reform Committee had posted a slick video, almost like a movie trailer, on its website. It strung together recent news reports of stores illegally exchanging food stamp benefits for cash and liquor.

UNIDENTIFIED WOMAN: The U.S. House Committee is now demanding answers.

FESSLER: Republicans have been talking about food stamp fraud a lot lately, citing it as one reason the program could stand some cuts, so it was no surprise that committee chairman Darrell Issa asked the Agriculture Department official in charge, Kevin Concannon, to respond to a recent investigation.

Issa said that the Scripps Howard News Service had found numerous store owners accepting food stamp benefits after they'd supposedly been barred from the program.

REPRESENTATIVE DARRELL ISSA: These companies and these individuals behind these companies need to be punished on a consistent basis. If, in fact, they are suspended, it needs to be for a period of time with an understanding of whether or not they are ever going to be able to sell again.

FESSLER: Concannon admitted that some dishonest retailers have slipped through the cracks, but he said it's rare and that, in fact, overall food stamp fraud is down from about four cents on the dollar to one cent.

He credited, in part, today's use of plastic benefit cards, which are more traceable than the paper stamps that recipients used to get.

KEVIN CONCANNON: In the era of paper coupons, it was much more widespread. The electronic benefit card has considerably brought that down. That and other work with states and it is one percent the last study we did.

FESSLER: Which he said is one of the lowest fraud rates in government. But still, one percent of a $70 billion program is a lot and witnesses told the panel that those who cheat are increasingly creative.

Phyllis Fong is the Agriculture Department's inspector general.

PHYLLIS FONG: Most recently, we've seen situations where there have been runners employed who will take cards from recipients and take them to many different retailers and use - swipe those cards to get benefits and there'll be maybe a group of retailers who work together to do this.

FESSLER: Sometimes making hundreds of thousands of dollars. Concannon says the department is beefing up enforcement and that it's barred about 8,000 stores from the program, but he noted that the overwhelming majority are honest.

Gerry Connolly of Virginia said, like other Democrats on the panel, he's concerned about fraud, but he questioned whether Republicans are trying to build a case for benefit cuts.

REPRESENTATIVE GERRY CONNOLLY: It's good that this committee is having this hearing to absolutely highlight there are still problems, but let's not overstate the problems and let's not lose sight of the mission, especially at budget time when some people might be thinking of a $100 billion cut in the program.

FESSLER: But Chairman Issa said the taxpayers still need to know that their money has been well spent. Pam Fessler, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

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