retail food stamp trafficking
What is food stamp “trafficking”?
Trafficking is the sale of food stamps for money or non eligible items. A food stamp recipient commits trafficking when they use their food stamps to buy ineligible items or for in exchange for cash. A retail store commits trafficking when they exchange cash for food stamps, or when they sell ineligible items.
Trafficking is defined in section 802 of title 21 of the United States Code. The definition is found in §271.2 which states “Trafficking means the buying or selling of coupons, ATP cards or other benefit instruments for cash or consideration other than eligible food; or the exchange of firearms, ammunition, explosives, or controlled substances, as defined in section 802 of title 21, United States Code, for coupons.”
If you are a retailer you face harsh consequence if you are found to be trafficking food stamps. The agency which investigates food stamp trafficking is the United States Department of Agriculture, Food and Nutrition Service. The USDA FNS investigates retailers that accept snap benefits in several ways.
If a retailer is found to have committed trafficking, the penalties are severe. The FNS may permanently disqualify a retailer for trafficking, and they often do matter of factly without further investigation. For many retailers, disqualification from the SNAP program is detrimental to their business. Some store simply go out of business if they are unable to accept SNAP because they can’t compete with stores that do.
Section 278.6 of Title VII of the United States Code governs the penalties for retail stores for trafficking. FNS may disqualify any retail store from participation in the program if the store is found to have violated the Food Stamp Act of 1977. The FNS gathers evidence of a violation by making on site visits to the store, a review of redemption data (particularly inconsistent redemption data), and a review of transaction reports from EBT systems.
If a retail store is disqualified, disqualification is for a period of 6 months to 5 years for the store’s first sanction. If the store is sanctioned a second time, then the period of disqualification is 12 months to 10 years.
The law states that a store found to have committed trafficking will be permanently disqualified from participation in the program.
If a store is disqualified and wants to be reinstated at the end of the disqualification period, the store must file a new application for participation under §278.1. FNS will review the application as a new application in order to make a determination about whether authorization to participate in the program will be available.
FNS has the discretion to impose a civil monetary penalty (CMP) in lieu of a disqualification. FNS may impose a civil money penalty of up to an amount specified in §3.91(b)(3)(ii) of this title for each violation in lieu of a permanent disqualification for trafficking, as defined in §271.2. For a retailer, the CMP is the best case scenario because the alternative is permanent disqualification.
When FNS has gathered enough evidence of a program violation or trafficking, the USDA FNS will send the retail store a charge letter. The charge letter will state the violations or actions which FNS considers to be the grounds for disqualification or grounds for the imposition of a CMP. The letter must specify the actions which constitute the violations. The charge letter will inform the retailer that they may respond within 10 days of receiving the letter. The response can be either in writing or orally, by phone.
The retailer must submit to FNS a response which offers information and evidence regarding the violations or actions. Any explanation of the circumstances will be helpful to a retailer’s case. The store must send the response to the officer who sent the charge letter.
When a retailer is accused of trafficking, the USDA FNS will send a specific charge letter which details evidence of trafficking. The trafficking charge letter states that the retailer must notify FNS if they wish to be considered for a civil monetary penalty instead of permanent disqualification. This request must be made within 10 days of the letter, and there are no extensions allowed for this. If the retailer does not make a request for CMP within 10 days, or fails to make the request at all, the retailer is barred from getting a CMP in lieu of disqualification.
If the retailer is disqualified, disqualification is effective upon receipt of the notice of determination, even if a request for review is filed. If the administrative or judicial review under part 279 reverses the disqualification, the retailer has no recourse for the value of the loss of sales or revenue during the period of disqualification.
Retailers who request and are determined to be eligible for a civil money penalty in lieu of permanent disqualification for trafficking can continue to participate in the program pending review and shall not be required to pay the civil money penalty pending appeal of the trafficking determination action.
Retailers that request a CMP in lieu of a permanent disqualification for trafficking must submit to FNS information and evidence stated in §278.6(i), that establishes the firm’s eligibility for a civil money penalty in lieu of a permanent disqualification in accordance with the criteria included in §278.6(i). This information and evidence shall be submitted within 10 days of the charge letter for trafficking.
May 17, 2018
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