Penalties for Food Stamp Fraud

By Vicki A. Benge ; Updated April 04, 2017

The U.S. Supplemental Nutrition Assistance Program, or SNAP, provides valuable nutritional support for low-earning households. Unfortunately some attempt to defraud the program, and penalties for food stamp fraud range from 12 months without benefits to years in prison and steep fines. How severe the punishment is typically depends on the seriousness of the crime and the dollar value of the fraud.

Reporting Income

The law requires full disclosure of household income when applying for or renewing SNAP benefits. Failure to do so can result in the applicant being banned from receiving further benefits. For a first offense, this is typically one year. If caught being untruthful a second time, the disqualification is for two years, and three times can result in a permanent bar to benefits.

Trafficking

Food stamp trafficking is one of the most common types of fraud involving food stamps, according to the USDA. Trafficking is the buying or selling of SNAP benefits by individuals or retailers. A criminal act is committed when someone trades food stamps for other items, typically cash or drugs. The buyer, who takes unlawful possession of food stamps valued at more than $100, is committing a felony. When the amount is less than $100, the crime is a misdemeanor.

Penalties vary by jurisdiction for the SNAP beneficiary. For example, in Pennsylvania trading benefits for illegal drugs can result in a two-year ban from the program. If caught a second time, the recipient can be banned permanently. Both state and federal agencies can prosecute individuals for food stamp fraud. The federal government typically focuses on retailers, and state authorities monitor individual beneficiaries.

Retailers

Retailers that participate in food stamp crimes can quickly defraud the government of large amounts of money. Penalties are not consistent across the board, but can be severe. For example, in September 2012, KPLC-TV reported that a Lake Charles, Louisiana, man was sentenced to 51 months in prison and ordered to pay restitution totaling close to $1.3 million to the USDA for food stamp fraud. He operated a convenience store and gave certain customers 60 cents on the dollar for their food stamp benefits.

The U.S. Attorney's Office in Maryland reported that 10 store owners or managers who were indicted for food stamp fraud in 2013 in separate scams to redeem food stamp benefits in exchange for cash were sentenced to prison terms of 18 months to 38 months with restitution fines ranging from $95,000 to $1.4 million.

Program Workers

State employees who work in food stamp programs can face stiff penalties for committing food stamp crimes. In January 2015, Dana Ferguson of the Associated Press reported on an employee of the Wisconsin Food Share program who created and renewed fraudulent accounts. She defrauded the government of more than $150,000 and was sentenced to 10 years in prison.

Reporting Suspected Abuse

If you suspect someone of food stamp fraud, you can report them to the USDA Office of Inspector General by calling toll-free 1-800-424-9121 or email usda.hotline@oig.usda.gov, or write USDA Office of Inspector General, P.O. Box 23399, Washington, D.C., 20026-3399. Complaints may be made anonymously, or you can ask that your identity be kept confidential.

About the Author

Vicki A Benge began writing professionally in 1984 as a newspaper reporter. A small-business owner since 1999, Benge has worked as a licensed insurance agent and has more than 20 years experience in income tax preparation for businesses and individuals. Her business and finance articles can be found on the websites of "The Arizona Republic," "Houston Chronicle," The Motley Fool, "San Francisco Chronicle," and Zacks, among others.