Questionable transactions include those made out-of-state and by deceased, incarcerated recipients 

JEFFERSON CITY, Mo. — Millions of dollars in questionable food assistance transactions were made by recipients who were deceased, incarcerated, or making purchases exclusively out-of-state, according to an audit released Tuesday.

The report also details issues with the integrity and accuracy of data and made recommendations to ensure potential fraud is identified quickly.

“This audit found hundreds of thousands of SNAP transactions that raised red flags, but were not seriously investigated by the Department of Social Services,” Missouri State Auditor Nicole Galloway said. “Misuse or abuse of these benefits means that taxpayer dollars are wasted and resources are not going to Missouri families in need.”

Over a two-year period, data analytics team at the State Auditor’s Office analyzed data on the Supplemental Nutrition Assistance Program, formerly known as the Food Stamp Program, administered through the state’s Department of Social Services. The department provides benefits to low-income Missourians by loading them on EBT cards to purchase groceries.

The report found the department consistently failed to review and investigate suspicious activity identified through system alerts. During an 18-month period, there were more than 51,000 alerts, but DSS cited a lack of resources to investigate questionable account activity.  

The majority of suspicious activity alerts were for recipients using their benefits out of state. The audit identified $16 million in purchases made exclusively out of state for 90 consecutive days or more. 3,837 recipients used EBT cards exclusively out-of-state for the entire two-year audit period with 39 folks used their benefits out-of-state for more than 700 days.

While some out-of-state use is permitted under federal guidelines, it is also an indication that a recipient may no longer be a Missouri resident and no longer eligible for benefits through the state.

In fact, Missouri law requires DSS to temporarily suspend — pending a department investigation of the recipient’s residency status — the account of any recipient who does not make a transaction in-state at least once every 90 days and send a 60-day warning. DSS is not complying with the state law that officials indicated conflicts with federal regulations.

The reports also found 3,668 cases where an EBT card was used more than 30 days after the death of the cardholder amounting to at least $29,987 in potential misuse of benefits. In one case the recipient died December 10, 2011 and the card was last used during the audit period on August 25, 2015.

The DSS received a waiver in November 2016, from the USDA allowing the department to expunge benefits belonging to a deceased, single member household when the death is verified. Current program regulations do not require benefits to be expunged until after 365 days of inactivity.

The report also identified 62 cases receiving SNAP benefits, but the cardholder was incarcerated throughout the entire period reviewed. Similarly, for an additional 2,358 cases, the cardholder was incarcerated during some portion of the period reviewed.

“We even found a case where a recipient who was in jail completed a recertification interview by phone with a Social Services caseworker,” Galloway said. “These types of situations show exactly why the department needs to take these recommendations seriously and ensure they are able to root out bad actors who are abusing the system.”

Recommendations included improving data quality and accuracy within the system. Transaction data is often incomplete, invalid or unreliable, making it difficult to manage information and identify fraud. The audit also recommended that DSS use data analytics to proactively identify and investigate benefit abuse and misuse.

Auditors also identified an error in the system that resulted in fewer alerts for even-dollar transactions, a warning sign of fraudulent behavior, and recommended additional protections to identify high-risk recipients who use their cards multiple times within a short period.

The DSS is in the process of developing a Request for Proposal to be issued in 2020 that will include data improvements. The department is currently going through an RFP process to provide verification of initial and ongoing eligibility data for SNAP benefits in accordance with a 2016 law.

The complete audit report is online here.