TAMPA — If folks from the neighborhood ran short of cash, Mike Booz would let them buy things from on credit. Then, once a month, they would pay him back with a swipe of the debit card holding their food-stamp benefits.
“I was helping people out,” said Booz, manager of the Kwik Stop convenience store at Florida and Hanna avenues in Seminole Heights.
Federal officials said the Kwik Stop was committing food-stamp fraud. They permanently banned the store from the food stamp program in 2012. It is one of 12 stores in Hillsborough County removed from the program during the past two years.
Waste and fraud were a big part of the debate as Congress spent the past few months debating billions in cuts to the food stamp program, now known as Supplemental Nutrition Assistance Program. On Friday, President Obama signed into law an $8 billion reduction over 10 years in SNAP funding.
But research into the management of SNAP shows that even as the ranks of users have grown, the program’s rate of fraud has been dropping — and is significantly smaller than fraud in Medicaid, Medicare and other government programs, said Stacy Dean, a vice president at the Center for Budget and Policy Priorities, a Washington think tank.
“There’s a huge disconnect between reality and the perception of the program,” Dean said.
In Florida, the program is most effective of all: The state ranks first in getting food stamp benefits to the people who needed them.
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In 2012, Florida earned an $8 million bonus from the Department of Agriculture for its accuracy. Less than 1 percent of Florida’s food stamp funding went astray, the department said.
Medicare, by comparison, the federal health care program for seniors and disabled people, loses about 8 percent of its payouts to fraud nationally, according to government figures.
In Florida alone, SNAP gives 3.5 million recipients about $5.6 billion in benefits, averaging $255 per household per month. With numbers that big, even a relatively few cheats can add up to millions of dollars.
In 2012, food stamp fraud in Florida amounted to $40 million. About two-thirds of the fraud was caught during the application process, according to Department of Agriculture figures.
The state and federal government define fraud broadly to include any one who gets more benefits than they should. The cause can range from honest mistakes to outright lies about income or household size.
A 2013 study by a state task force estimated about 7.5 percent of the state’s food stamp claims were fraudulent. In Hillsborough County, the rate was nearly double that at 14.3 percent. In Miami-Dade County, the rate was 28 percent.
The report didn’t look at store-based fraud, known as trafficking, which often involves people selling their benefits for cash or colluding with the shop owner to buy something that’s not food. The Agriculture Department estimates that trafficking amounts to about 1.3 percent of fraud cases, down from 4 percent in the late 1990s.
That doesn’t keep people from complaining that their neighbors are buying beer or other contraband with their benefits. Jack Heacock hears the stories.
“There’s a bunch of different activities going on that people see, and we get the calls,” said Heacock, director of the Florida’s Division of Public Assistance Fraud, which investigates scams involving food stamps, Medicaid and other aid.
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Those calls have increased over the past five years or so as millions of new people have flocked to the food stamp program for help feeding their families. That dramatic growth has led to a corresponding growth in fraud as people scam the system, either getting more benefits than they should or cashing in their benefits to buy non-food items.
What are they spending the money on?
“We have asked the recipients in the past and it runs the gamut,” Heacock said. “Most of them say they’re trying to pay bills or buying school supplies for their kids. Most of it is pedestrian. But I’m not always believing that.”
Florida 16,000 stores qualified to accept food stamps. Over the past two years, the USDA has stripped 168 stores of their permits to serve SNAP customers. About a quarter of those stores are in Miami-Dade County.
This year, Florida legislators added $241,000 to Heacock’s budget so his agency could hire a contractor to pursue more stores suspected of trafficking. That brings the total budget to $4.9 million.
Heacock said that has freed his 63 staff members to investigate more cases of individuals scamming SNAP as well as Medicaid and other programs.
Last year, Heacock’s office finished more than 3,300 fraud investigations worth $9.7 million. He expects this year’s fraud cases to amount to more than $12 million, most, but not all, from food stamps.
Heacock’s office gets about 300,000 suspected fraud cases each year from the Florida Department of Children and Families, which signs people up for food stamps, Medicaid — the federal-state health care program for the poor and disabled — and other assistance.
In 2012, the state reviewed 60,800 suspicious food stamp cases and found nearly half of them involved fraud, according to Agriculture Department records. The vast majority of those cases involved people falsifying information about their income or household size or not reporting changes as required every six months, Heacock said.
The state recovers some of that lost money by garnishing wages or benefits but that can take time.
“You’re going after indigent people to begin with,” Heacock said.
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Technology has played a big part in reducing fraud in the SNAP system in Florida.
The shift away from paper coupons — the original food stamps — to a plastic debit card known as the electronic benefits transfer card put a dent in fraud, Heacock said.
“The EBT card that SNAP benefits are loaded on has given us the ability to see where a card is being used, how often and for how much,” Heacock said.
Each swipe of the card creates a record about both the cardholder and the vendor. The state and federal governments can mine that data to find patterns that signal fraud, Heacock said.
Sometimes, tamping down on fraud is as simple as looking for people offering to sell their benefits for cash on Facebook or other social media site, Dean said.
The 2013 report on SNAP fraud criticized the state for putting too little energy into weeding out potential fraud up front. About 35 percent of fraud cases are discovered when people apply for benefits.
The rest fall into what the report calls “pay and chase” enforcement: The state hands out benefits then spends millions trying to claw back money lost to fraud.
The report appears to be changing things in Tallahassee.
DCF spokeswoman Michelle Glady said her agency created its own in-house investigative division to look for incidents of identity theft and other fraud at the beginning of the food stamp process instead of after the benefits have gone out.
“We continue to work closely with our partners and have improved our data sharing,” Glady said.
Heacock said his agency and the DCF now meet regularly to review potential fraud cases.
“Good communication between the division and the department is key,” he said.
Pulled from food stamp program*
♦ Quick Pick Food Store, 6815 N. Armenia Ave., Tampa
♦ Memorial BP, 5701 Memorial Hwy., Tampa
♦ Central Grocery, 3602 N. 29th St., Tampa
♦ Africa On The Bay, 1908 W. Dr. Martin Luther King Jr. Blvd., Tampa
♦ Kwik Stop, 1613 E. 24th Ave., Tampa
♦ Kwik Stop, 6121 N. Florida Ave., Tampa
♦ Fat Boy, 601 N. U.S. Highway 41, Ruskin
♦ Sun and Fun Farm Grocery Corp., 15005 Balm Road, Balm
♦ Baker’s Mini Mart, 2504 N. Armenia Ave., Tampa
♦ Family Market, 7423 N. Florida Ave., Tampa
♦ Beverage Castle Of Seffner, 12002 E. Dr. Martin Luther King Jr. Blvd., Seffner
♦ Sunshine Market, 3207 Orient Road, Tampa
* Hillsborough stores, last two years
Source: U.S. Department of Agriculture