Food stamp recipients who trade or sell their Supplemental Nutrition Assistance Program benefits for money or use them to purchase beverages just so they can dump the liquid and return the empties for cash now risk losing their benefits.
The U.S. Department of Agriculture has taken a hard stand on “water dumping” and the selling or trading of benefits and announced Wednesday that it has updated the definition of trafficking — a disqualifying action — to include both as stealing of benefits.
“I recall several years ago Bangor police responding to a downtown store where a person bought a whole case [of bottled water] and just stepped outside the door and dumped all the water out for the purpose of getting that 5 cents,” USDA Undersecretary Kevin Concannon said Wednesday during a phone interview. “To me, that was such a flagrant violation of the program.”
The young couple was caught on video dumping the water in front of Shaw ’ s grocery store and told police that they didn’t think there was anything wrong with what they were doing. The bottled water they bought with their SNAP card cost around $6 and the duo got $2.40 back in cash from the redeemed bottles.
The woman who took the video on her cellphone called the Bangor Daily News and said she was outraged that people on welfare were dumping public money down the drain.
“That just drives them crazy,” Concannon said, referring to residents who pay taxes to support the federal welfare program responding to obvious abuse. “Americans across the country want to help but they don’t want [the benefits] abused.”
If a person is caught selling or trading their SNAP benefits, they are put on a progressive discipline plan, and if their welfare benefits are taken away, they are gone for life, the USDA undersecretary said.
“Initially, they are taken out of the program for a couple of months,” Concannon said. “If they violate the rules again, they are again taken out of the program for a couple of months. The third time — they are taken off forever.”
The names of those removed from the program will be put on a nationwide banned list, he said.
“It’s a very serious violation,” Concannon said.
The water dumping rule affects only about a dozen states in the country that have bottle return laws, including Maine, where empty bottles and cans are worth 5 cents and glass milk quart bottles fetch $2, he said. Michigan, where returnables are worth 10 cents each, and other states also saw abuses, Concannon said.
During 2012, more than $377 million in SNAP funds were distributed in Maine, an increase from the approximately $348 million disbursed in 2010, according to the Maine Department of Health and Human Services website. A monthly average of 254,600 low-income Mainers received food stamps last year.
“Maine doesn’t have a history of high trafficking or fraud,” said Concannon, who spent years in Maine state government, most recently as commissioner of the Maine Department of Human Services between 1995 and 2002.
While the USDA was working to update its rules, state prosecutors asked in January 2011 that law enforcement agencies forward water dumping reports to the Maine attorney general’s office.
“The recent change of the federal definition [of SNAP trafficking] to include water dumping means the state of Maine can now begin prosecuting cases such as these, to the extent that such cases can be proven,” Kaylene Waindle, special assistant for the Maine attorney general’s office, said Wednesday.
Relatively few SNAP recipients are rulebreakers, Concannon said. When the agency switched from paper food stamps to electronic debit cards a few years ago, the rate of trafficking was estimated to be around 4 percent, he said.
Nowadays, “It’s down to 1 percent,” the undersecretary said.
“We have 100 people [around the country] who do undercover surveillance and buys to find people who are violating the program rules,” Concannon said.
USDA’s effort to ensure the integrity of SNAP is not only focused on recipients. The agency also is seeking comment on a new a proposal to immediately suspend retailers who are suspected of blatant trafficking in SNAP benefits. A store that provides cash or nonqualifying products in exchange for benefits is an example of trafficking, Concannon said.
“Currently, when a retailer is suspected of trafficking, USDA must first conduct an investigation before suspending the retailer,” a USDA news release states. “During this time, retailers may be able to conduct substantial fraudulent SNAP activity and ultimately make large profits from trafficked benefits. This proposal would authorize USDA to immediately suspend the payment of redeemed SNAP benefits in flagrant trafficking situations, pending action to disqualify the retailer.”
The USDA’s compliance analysts and undercover investigators reviewed more than 15,000 stores in 2012 and investigated more than 5,000 for violations. They ended up permanently disqualifying 1,387 stores for trafficking in SNAP benefits and imposed sanctions on 692 others.
Before a store could be suspended from accepting SNAP benefits under the proposed rules, the USDA would send an undercover investigator to look into the violation and the report would be presented to the Office of the Inspector General and the Department of Justice, Concannon said.
“We would typically go out and have an undercover person go see if they could confirm it,” he said. “They might go back a few times. After it’s confirmed, then we pull the plug.”
The American Civil Liberties Union of Maine says the new proposed rule regarding retailers would hurt those who are enrolled in the program.
“Handing out penalties based on suspected behavior throws ‘innocent until proven guilty’ right out the window,” Rachel Healy, a spokeswoman for the Maine ACLU, said Wednesday. “This proposal will have the unfortunate effect of making it harder for low-income people to buy the food they need, based on the mere possibility that a store engaged in wrongdoing.”
SNAP is designed to feed the country’s needy, and those who abuse the rules for their own benefit are the focus of new rules and the proposed rule changes, Concannon said.
“The intent of the program is for it to be used for food for the households that qualify for the program,” he said. “SNAP serves about 47 million Americans each month and almost half of them children.”
The USDA announcement is part of the Obama administration’s Campaign to Cut Waste, which is designed to fight fraud, abuse and misuse in federal programs.
The proposed rule regarding retailers will be published in the Federal Register on Friday. To review the rule and submit comments, go to regulations.gov and search under proposed rules with the regulation identifier number 0584-AE22. The comment period ends 60 days from the day it is published.
Those who see a misuse or waste of federal SNAP funds can call the national fraud hotline at 800-424-9121.