EBT Trafficking Unit investigates vendor fraud

The OIG Electronic Benefits Transfer (EBT) Trafficking Unit investigates allegations of retailers' misusing or trafficking Supplemental Nutrition Assistance Program (SNAP) benefits. These activities can erode public trust in a nutrition program with more than 3.5 million eligible participants in Texas. In the fourth quarter of fiscal year 2022, the trafficking team opened 129 cases, completed 152 cases and recovered $254,359 in overpayments. 

The EBT unit continues to receive referrals regarding the cloning and skimming of benefit client cards and personal data from point-of-sales devices in retail stores. This scheme involves suspects altering the point-of-sales unit with another device that records the client's information. Once the information is recorded, a card is created and used to deplete the account's benefit balance without the client's knowledge. OIG investigators are working closely with state and federal partners to address this issue.

A sample of OIG investigations into SNAP fraud for the fourth quarter includes:

  • The EBT Trafficking Unit completed an investigation on a candy shop in Pharr that allegedly allowed SNAP clients to purchase party goods and decorations, including superhero and cartoon cardboard cutouts and personalized candy bags and boxes, with SNAP benefits. An undercover OIG investigator purchased these same items using SNAP benefits. When confronted, The retail owner and 10 SNAP clients confessed to the allegations, prompting investigators to seek administrative disqualification from the snap program and refer the case for prosecution. In total, SNAP lost $6,311 to the scheme.
  • San Antonio's EBT Trafficking Unit received a referral alleging a restaurant owner was purchasing SNAP benefits from clients to be used to buy inventory items for the business. An investigation obtained evidence supporting the allegation, and the restaurant owner admitted to exchanging cash for SNAP benefits. Additionally, the owner's daughter admitted to using EBT cards to purchase food for the restaurant. Investigators submitted the case to the county District attorney for prosecution and began administrative disqualification for clients who sold their benefits to the restaurant.  
  • The EBT Trafficking Unit investigated two retailers in Hidalgo County accused of allowing SNAP clients to establish credit accounts and use benefits to pay for them. Allegations also claimed the retailer allowed clients to purchase ineligible items, such as alcohol and cigarettes. Both cases were referred to the U.S. Department of Agriculture, Food and Nutrition Services, which permanently disqualified the retailers from participating in SNAP. 

To learn more about the OIG's efforts to stop SNAP fraud, read the quarterly report on the OIG website.