USDA bars cash refunds for food stamp purchases

By Megan R. Wilson - 02/21/13 04:18 PM ET

The Obama administration is taking additional steps to crack down on cash payments for food stamps.

The U.S. Department of Agriculture (USDA) on Thursday announced it would take action against the “bad actors” who abuse the program by extending the legal definition of “trafficking” to include indirect ways of receiving cash for Supplemental Nutrition Assistance Program (SNAP) benefits.

It is already illegal to sell SNAP benefits directly for cash, but the new rules would also bar cash refunds for products purchased with food stamps.

“Where there is a will to commit malfeasance, bad actors will try to find a way, and we must do everything we can to stay ahead of the curve," said Agriculture Under Secretary Kevin Concannon. "Today's announcement reaffirms USDA's ongoing commitment to cracking down on abuse and protecting taxpayers' investment in this critical nutrition lifeline.”

The USDA is also mulling a proposal to immediately freeze the payment of SNAP benefits to retailers “suspected of flagrant trafficking violations,” rather than waiting for an investigation to suspend the store’s ability to redeem the SNAP benefits. Comments are being accepted on the proposed rule.

Last year, the USDA permanently disqualified almost 1,400 retailers from participating in SNAP for exchanging cash for benefits or falsifying applications.

According to the most recent SNAP fraud report by the USDA, food stamp trafficking “diverted an estimated $330 million annually from SNAP benefits –— or about one cent of each SNAP dollar — between 2006 and 2008.”

Out of the nearly 240,000 stores active in the SNAP program, about 8.2 percent trafficked, according to the 2011 investigation.