Unusual activity: Auditors said indicators of food stamp fraud include frequent transactions in the same amount, frequent manual card entry, even-dollar transactions at small retailers, repeated replacement of benefit cards, consecutive transactions in a one-hour period, and excessive invalid attempts to type in a PIN. They found all of these indicators in reviewing data.

Auditors discovered unusual card activity at neighborhood corner stores where an entire month’s benefits were spent in a single transaction. Because those stores don’t typically offer the staples that families need, auditors suspect fraud is occurring. Auditors also discovered a pattern of even-dollar transactions that are not typical of normal shopping patterns which also suggest abuse.

Benefits for the dead: Federal law requires states to compare data on deaths to its recipient database to determine if anyone who has died is still receiving benefits, using dates of birth, Social Security numbers and addresses as key data points. Federal law requires this match to occur at least once a year, but states can perform the comparison more regularly. Ohio does comparisons on a weekly basis, but the alerts that are triggered are sent to case workers in counties to review as time permits.

Auditors found 36 instances where recipients had been issued $24,406 in benefits more than a year after their death, with $13,598 being spent in nine cases. The examination did not explore mid-year deaths, meaning anyone who had been issued benefits less than a year after their death would not be discovered.

“There needs to be tighter controls over these dollars. The death benefit comparison needs to be made quarterly to safeguard our money,” Yost said.

Even-dollar transactions: The extensive data allowed auditors to identify how many even-dollar transactions exceeding $100 were occurring, many at small retailers. These transactions amounted to $28.5 million being spent at 3,200 retailers. “Even-dollar transactions are not common when purchasing food, particularly at small retailers where inventories are more limited,” auditors reported. “The risk could be less at large retailers where recipients are more likely to use their full benefit amount, typically issued in whole dollars.”

When auditors reviewed the limited retailer data available to them – looking for frequent even-dollar transactions exceeding $100 where the retailer and recipient were the same – a pattern emerged. For example, one retailer redeemed $146,971 through 690 even-dollar transactions. Another was paid $119,133 through 707 transactions – all even-dollar sales. The top 10 totaled $947,632 through 5,104 even-dollar transactions. 

When it came to recipients, they found unusual patterns as well. One recipient spent $11,504 during the six-month audit period in 60 even-dollar transactions. Another spent $4,626 in 12 transactions, with the transactions alternating in amounts of $575 and $196 within minutes of each other on the same day each month.

Out-of-state spending: More than $28.7 million in SNAP funds were spent outside of Ohio by 118,316 recipients. Auditors said that excessive use of the cards out of state could indicate either the recipient does not live in Ohio, is receiving benefits in more than one state, or is selling their card and benefits. In analyzing the data, auditors eliminated transactions occurring in border states and identified the 10 states with the most activity. 

The most activity occurred in Florida, where 9,174 recipients spent $2.1 million, with most being used in Orlando ($119,130) and Jacksonville ($104,091). Georgia was second, followed by Minnesota, Texas and Tennessee. Substantial spending in another state, auditors said, suggests there are risk factors that warrant further investigation.

The Auditor’s staff recommended ODJFS implement new procedures to monitor out-of-state spending to determine whether the transactions are necessary because of work-related travel or whether frequent use of benefits in another state is fraudulent.

Other findings:

• Twelve instances were identified where the same individual had multiple accounts, leading to $17,878 in questioned costs (reported through the state’s annual audit). Auditors also found dozens of cases where the wrong Social Security number was entered into the system and the individual was determined eligible, meaning the individual’s real social security number could again be used by another applicant and fraudulent claims could be paid.
• The frequency of 10 or more card replacements has dropped since the first audit in 2011, meaning changes made by ODJFS to better control this problem have worked. Excessive card replacement (four cards in a 12-month period) indicates the likelihood that the recipient is selling his/her benefits with the card and then requesting a new one. 
• There are excessive instances where cards are accessed through manual entry instead of swiping. Frequent manual card entry can mean the benefits were sold to a retailer or other unauthorized user but the card was kept by the recipient. One retailer processed 2,813 transactions worth $152,717 via manual card entries in a 6-month period. Another processed 814 worth $148,435. The top 10 retailers with the highest dollar amount associated with manual card entries totaled $1.1 million on 18,514 transactions. 
• Auditors identified 96,367 recipients who used at least their monthly benefit amount in a single transaction. The total of those purchases were $25.4 million. In some cases, recipients allowed their benefits to build up more than six months and then redeemed the full amount all at once. These transactions could indicate the recipients were transferring their benefits to others for cash or may no longer be eligible for benefits.
• ODJFS has set four as the number of allotted PIN attempts before the card is automatically locked out, a deterrent to prevent use of lost cards. Auditors found 880 recipient cards had more than four PIN attempts, including 28 cards with 10 attempts and one with 35. 

A full copy of this report is available online.

Click here to watch a video of the full press conference.

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The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,800 state and local government agencies.  Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Contact:
Ben Marrison
Director of Communications
614-644-1111