Fraud Costs for SNAP Agencies Soar, Driven by EBT Skimming and System Complexities (LexisNexis)

Fraud Costs for SNAP Agencies Soar, Driven by EBT Skimming and System Complexities

Wednesday, October 23rd, 2024 Fraud Legislation & Regulation Risk Management Technology

The 2024 LexisNexis True Cost of Fraud Study provides an in-depth analysis of the rising fraud costs faced by Supplemental Nutrition Assistance Program (SNAP) agencies and Integrated Eligibility Systems (IES). The study reports that fraud costs are growing, largely driven by tactics such as Electronic Benefits Transfer (EBT) skimming and account takeovers. On average, for every one dollar of benefits lost to fraud, agencies incur an additional loss of four dollars and forty-eight cents, an increase from previous years. This growing financial burden is compounded by the challenges of managing fraud across integrated eligibility systems, which are designed to manage multiple human services programs, such as Medicaid and Temporary Assistance for Needy Families (TANF), alongside SNAP.

While these integrated systems provide better data sharing and streamlined processes, they also create new vulnerabilities. With multiple access points for fraudsters, such as online and mobile channels, fraud has become more difficult to detect and prevent. In 2024, the cost of fraud per dollar lost through integrated systems rose to four dollars and four cents, up from three dollars and eighty-five cents the previous year. Agencies must now balance the advantages of system integration with the increased fraud risks it brings.

The report also highlights that outdated systems and manual processes continue to hinder the efficiency of SNAP agencies. Delays in application processing have become a major concern, negatively impacting both beneficiaries and caseworkers. SNAP agencies are often unable to quickly verify eligibility and identity data, which causes backlogs and contributes to worker stress. Furthermore, these delays slow the delivery of benefits to individuals and families in need, exacerbating their financial struggles and reducing trust in the system.

Despite these challenges, some agencies are beginning to see improvements by adopting modernization measures. Agencies that have integrated advanced fraud detection technology early in the application process have experienced faster processing times, reduced fraud costs, and improved overall experiences for both workers and beneficiaries. However, many SNAP agencies still rely primarily on post-issuance fraud detection measures, missing opportunities to prevent fraud at the front end of the application process. The study emphasizes the importance of modernizing both fraud detection and operational processes to combat fraud effectively without causing delays or frustration for the people the programs are meant to serve.

In conclusion, the 2024 True Cost of Fraud Study highlights the critical need for SNAP agencies to balance the adoption of new technologies with effective fraud prevention strategies. As fraud costs continue to rise, agencies must modernize their systems, improve data verification processes, and shift their focus to earlier fraud detection to protect program integrity and support both caseworkers and beneficiaries.


External References & Further Reading
https://risk.lexisnexis.com/insights-resources/research/2024-true-cost-of-fraud-for-snap-and-ies-agencies
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