WASHINGTON -- Food stamp recipients are ripping off the government for millions of dollars by illegally selling their benefit cards for cash -- sometimes even in the open, on eBay or Craigslist -- and then asking the government for replacement cards. The Agriculture Department wants to curb the practice by giving states more power to investigate people who repeatedly claim to lose their benefit cards.
It proposed new rules yesterday that would allow states to demand formal explanations from those who seek replacement cards more than three times a year. Noncompliants can be denied further cards.
"Up to this point, the states' hands have been tied unless they absolutely suspected fraudulent activity," said Kevin Concannon, the undersecretary for food, nutrition and consumer services.
Overall, food stamp fraud costs taxpayers about $750 million a year, or 1 percent of the $75 billion program that makes up the bulk of the department's total budget for the Supplemental Nutrition Assistance Program. Most fraud occurs when unscrupulous retailers allow customers to turn in their benefits cards for lesser amounts of cash. But USDA officials are also concerned about people selling or trading cards in the open market, including through websites.
Last year, the department sent letters urging eBay and Craigslist to notify customers that it's illegal to buy and sell food stamps. USDA officials followed up last month, saying they are still getting complaints that people are using the websites to illegally market food stamps.
eBay and Craigslist have told the government they are actively reviewing their sites for illegal activity and would take down ads offering food stamp benefits for cash. The USDA also warned Facebook and Twitter about the practice.
South Dakota, Oklahoma, Washington, D.C., Minnesota and Washington state have the highest percentage of people seeking four or more replacement cards over a year. That doesn't necessarily indicate a high rate of fraud, officials say. Wyoming, Idaho, New Hampshire, North Carolina and Alabama have the lowest percentage of households requesting four or more cards in 12 months.