LexisNexis Risk Solutions True Cost of Fraud Study: SNAP Report Reveals Every $1 of Fraud Costs Agencies $3.72

09/26/2022

ATLANTA — LexisNexis® Risk Solutions today released the inaugural edition of the True Cost of Fraud™ Study for Supplemental Nutritional Assistance Program (SNAP) Agencies which surveyed leadership from 74 state and county agencies that administer SNAP across 35 states. The report also explores key indicators related to fraud detection, prevention, and the benefit allocation experience.

In addition to analyzing the cost of fraud, the study explores the time and resources expended by SNAP investigators to prevent attacks and mitigate fraud and analyzes current fraud impacts and trends affecting this critical government benefit.

• Attacks and Costs: Every $1 of benefits lost through fraud costs SNAP agencies $3.72. This includes additional costs related to internal labor (for detection, investigation, reporting) and administrative tasks (for data exchanges, etc.). These attacks are primarily due to identity fraud, eligibility, account takeover, and trafficking from fraudulent Electronic Benefit Transfer (EBT) transactions.
• Digital Transactions Increase Fraud: The cost of fraud is higher for agencies that accept more applications from mobile and web platforms.Mobile transactions represent an average of 15% across all channels including in-person, online, and call centers. Agencies that have more than 20% of mobile channel submissions experienced an even greater loss - $4.40 for every $1 of benefits lost through fraud.

• Unproven Errors Cost Money: The majority of fraud losses stem from inadvertent household errors (38%) and suspicious cases that are not worked given limited resources (34%). Though they represent the largest vector for fraud, many inadvertent errors are never proven due to lack of criminal investigation, or they are lost within the administrative process.
• Bots on the Attack: Agencies with above average mobile-based applications are being increasingly targeted by malicious bots.45% of these agencies indicate that bot attacks have increased year-over-year.
• Top Fraud Challenges: Identity-related fraud is a leading contributor to SNAP agency fraud losses and is present in 31% of reported cases. In addition to identity theft, 25% of fraud is from account takeovers, 24% from eligibility fraud, and 20% from trafficking of benefits.

"SNAP is a critical public assistance program that helps our most needy populations,” said Andrew McClenahan, senior director of Social Services strategy at LexisNexis Risk Solutions. “Unfortunately, there are criminal groups increasingly targeting this important government program. This study gives great insight into where the pain points are, the challenges faced by agencies while administering food assistance, and the impacts from domestic and international fraudsters. Without digital identity tools that provide equitable and expedient access to benefits, the true cost of fraud will continue to grow under the persistent threat of identity thieves, bot attacks, and insufficient technology and manpower resources."

Download a copy of the True Cost of Fraud Study for SNAP.

About LexisNexis Risk Solutions
LexisNexis® Risk Solutions provides customers with information-based analytics and decision tools that combine public and industry-specific content with advanced technology and algorithms to assist them in evaluating and predicting risk and enhancing operational efficiency. Headquartered in metro Atlanta, Georgia, the company has offices throughout the world, serves customers in more than 190 countries and territories and is part of RELX. For more information, please visit LexisNexis Risk Solutions and RELX.