Errors and Fraud in the Supplemental Nutrition Assistance Program (SNAP)
Congressional Research Service
While retailer trafficking and retailer application fraud are primarily pursued by a single federal
entity (USDA-FNS), recipient violations (i.e., recipient trafficking and recipient application
fraud) are pursued by 53 different state agencies. Recipients found to have trafficked may be
required to repay the amount trafficked and may be subject to disqualification from receiving
SNAP benefits and other penalties. State agencies’ efforts to reduce and punish recipient fraud
vary, which is evident, for instance, in state-submitted data on recipient disqualification activities.
The national payment error rate (NPER) is the most-cited measure of nationwide payment
accuracy. Using USDA-FNS’s Quality Control (QC) system, the NPER estimates states’ accuracy
in determining eligibility and benefit amounts. The NPER has limitations, though; for instance, it
only reflects errors above a threshold amount ($38 in FY2017). After publishing a FY2014
NPER, USDA Office of the Inspector General (OIG ) and USDA-FNS identified data quality
issues that prevented the publication of an NPER in FY2015 and FY2016, but USDA-FNS
published a NPER for FY2017 in June 2018. For FY2017, it was estimated that 6.30% of SNAP
benefit issuance was improper—including a 5.19% overpayment rate and a 1.11% underpayment
rate. Regardless of the cause of an overpayment, SNAP agencies are required to work toward
recovering excess benefits from households that were overpaid (this is referred to as “establishing
a claim against a household”). Applying these rates to benefits issued in FY2017 (over $63.6
billion), an estimated $3.30 billion in benefits were overpaid, and about $710 million in benefits
were underpaid.
Overpayments and underpayments to households can be the result of recipient errors, recipient
fraud, or agency errors during the certification process. State agencies rely on household-provided
information in applications, but also employ a range of data matches—some required by federal
law, some optional that vary by state—to promote accuracy and double-check information.
According to the USDA-FNS FY2016 State Activity Report, of states’ established claims for
overpayment, approximately 62% of overpayment claim dollars were for recipient errors, about
28% were for agency errors, and about 11% were due to recipient fraud.
In addition to inadvertent agency errors, state agencies and their agents have been involved in
isolated instances of fraud. Beyond cases of fraud conducted by state agency employees for
personal gain, in FY2017 the Department of Justice obtained False Claim Act settlements from
three state agencies accused of falsifying their Quality Control data and unlawfully obtaining
federal bonuses. Investigations into this matter, conducted by the USDA-OIG, are ongoing.
Across all types of fraud, oversight entities such as the Government Accountability Office and
USDA-OIG have identified issues and strategies relevant to combating errors and fraud in SNAP.
USDA-FNS has also proposed related regulatory changes that were not finalized. On the retailer
side, issues identified focus on opportunities to prevent and more promptly punish trafficking. On
the recipient side, issues identified include the nonexistence of a recipient fraud rate, states’varied
levels of anti-fraud efforts (which may be better incentivized), and improvements to data
matching in the application process. During the 115
th
Congress, Members voted on farm bill
proposals that contained some changes to SNAP program integrity policy; these proposals are
summarized in CRS Report R45275, The House and Senate 2018 Farm Bills (H.R. 2): A Side-by-
Side Comparison with Current Law.
Changes that might strengthen payment accuracy and punishments against fraud can be in tension
with other policy objectives such as preserving recipient access to the program, and may have
unintended consequences such as incurring costs greater than their savings. Balancing program
objectives such as these are considerations for policymakers in this area.