Dead retailers redeemed more than $2 billion worth of food stamps, according to a new audit.
The U.S. Department of Agriculture's inspector general reviewed billions of transactions through the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. It found that thousands of stores authorized to accept food stamps were using the Social Security numbers of deceased persons.
An audit released Thursday found instances of potential fraud where the Food and Nutrition Service issued food stamps through stores that claimed to be owned by children or the dead.
"We found that 3,394 authorized SNAP retailers (retailers) used Social Security Numbers (SSN) that matched SSNs of deceased people," the inspector general said. "Additionally, 193 retailers listed owners who were not at least 18 years of age. While FNS did have some controls to edit or verify SNAP retail owner information, these controls were not adequate to ensure owner information accuracy."
Between October 2013 and June 2015, the inspector general identified 3,394 stores owned by 1,819 people who were using SSNs listed on the Social Security Administration's Death Master File.
"These 3,394 retailers redeemed about $2.6 billion in SNAP benefits," the inspector general said. The 193 businesses that reported child owners redeemed $41 million in food stamps.
"Without accurate retail owner data such as birth dates and SSNs, [the Food and Nutrition Service] FNS has little assurance that retailers are who they say they are," the inspector general said. "This could leave the program open to abuse by disqualified individuals and others wishing to hide their identity for possible fraudulent purposes."
"If indeed some of these retailers are wholly owned by deceased persons or persons under the age of 18, this situation could leave FNS with little recourse other than disqualification in the event that adverse action needs to be taken against a particular retailer," the inspector general added.
An average of 46 million Americans receive food stamps every month through the food stamp program, which costs $70 billion per year.
For the audit, the inspector general reviewed roughly 280,000 retailers responsible for 1.56 billion food stamp transactions worth $23 billion.
The department said some of the businesses that reported minors as owners had mistakenly entered the date they applied to redeem food stamps as their date of birth.
The government admitted it "did not have formal procedures for what action, if any, should be taken to secure FNS interests" if a store owner was recorded as being under the age of 18.
The Food and Nutrition Service said it does have an edit check in one of its databases to "ensure owners were at least 5 years old."
The government said it is reviewing the 1,819 owners using the SSNs of dead people.
So far the department has reviewed 147 owners and removed 122, or 83 percent, from the program.
Of the remaining stores, seven are no longer authorized to redeem food stamps for other violations. Eighteen cases were found to be valid; in some of these cases, the business owner had died but the business was still operated by the deceased owners' spouse.