Trafficking in SNAP Benefits
By Carmen Vizaino
Partner Wahid Vizcaino LLP
Trafficking in SNAP benefits is when benefits are traded for cash or other items such as drugs. Aside from being a crime, it carries the severest penalty that can be levied against a business authorized to accept SNAP benefits. The USDA has stepped up investigations into this area, as it has been a growing problem. Trafficking seems to be a problem more commonly seen in small convenience stores rather than large retail grocery stores.
There are many ways trafficking can happen, thus creating liability for the store owner. Trafficking can be an exchange, by the cashier or other employee, of a cash payout for benefits on the EBT card. For example, the retailer trades $100.00 worth of EBT benefits charged on the card and gives the customer $50.00 cash in exchange. Another common method is where the customer can use the EBT card to pay for $100.00 of qualifying items such as milk and bread but is receiving $50.00 of non-qualifying items such as liquor or cigarettes. It is not unusual for the employee to receive a benefit in the form of a kickback from the proceeds of the crime.
It may seem unjust or counterintuitive for the owner, who did not participate in, or was unaware or not even present when such actions occurred, to be held liable. Despite this, the law is clear, the owner is liable for the acts of his or her employees. What makes an allegation of trafficking even more precarious is that the USDA can raise such allegations based on circumstantial evidence. That means that even in the absence of any witnesses or participants who were seen or admitted to having participated in a trafficking scheme, the USDA can still make the allegation based solely on data. For example, if the data shows that a customer purchased $100.00 worth of groceries and the next day the same customer purchased $95.00 worth of groceries, that would raise a “red flag”.
When there are large back to back purchases by the same customer, it is presumed that the customer could not possibly consume that amount of groceries in such a short time. The USDA may believe that trafficking is the logical conclusion. Once a pattern has arisen where a certain amount of these “red flag” transactions show in the EBT data, a charge letter is sent to the store. At that point, the store owner should act immediately and contact an attorney. As you may recall from previous blog posts, the person charged with determining whether this allegation rises to the level of sanctioning the store is employed by the same agency that is accusing the store of the bad acts. Additionally, any appeal of that person’s decision is done within that same agency. Once that process has been completed, the only remedy is costly and risky litigation in Federal Court against the USDA. The sanctions for trafficking in SNAP benefits include permanent disqualification from ever being able to accept SNAP benefits at your store, monetary fines in the hundreds of thousands of dollars, and limits on transfer and selling ownership of the business. There is also potential criminal liability.
If you have received an Charge Letter contact an attorney, such as those at Wahid Vizcaino, immediately. It can be properly dealt with, but the worst thing a business can do is ignore the problem.
 . For full definition see SR 16-15