LexisNexis Risk Solutions True Cost of Fraud Study: SNAP and IES Reveals Every $1 of Fraud Costs Agencies $3.85

09/26/2023

ATLANTA — LexisNexis® Risk Solutions today released its second annual LexisNexis® True Cost of Fraud™ Study for Supplemental Nutrition Assistance Program (SNAP) and Integrated Eligibility Systems (IES). This authoritative study informs the level and impact of fraud, including challenges, volume, and cost, as well as resources that SNAP and IES agencies utilize to detect and prevent fraud.

The 2023 study features an expanded scope that includes integrated eligibility systems (IES) including:

• Supplemental Nutrition Assistance Program (SNAP),
• Center for Medicaid Services (CMS),
• Special Supplemental Nutrition Program for Women, Infants and Children (WIC),
• Temporary Assistance for Needy Families (TANF), and
• Low-Income Home Energy Assistance Program (LIHEAP).

The study reports on key challenges and drivers 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: Benefits fraud costs SNAP agencies $3.85 for every dollar that is lost, up from $3.72 in 2022. SNAP agencies that have more multi-program responsibility and an above average level of mobile-based applications, lose $4.05 for every $1 lost to fraud.
• Multiple Factors for Loss: EBT card ID theft occurs more frequently among IES agencies with broader eligibility across programs. Mobile channels continue to be a challenge, with IES multi-program eligibility agencies attributing more losses to eligibility fraud (29% versus 21% for those with SNAP-only eligibility authority and below average mobile transactions).
• Complicated Factors Cause Key Challenges: Application identity and eligibility routed to call centers, inability to identify malicious bot transactions, policies and waivers that inadvertently allow fraud, and the inability to determine transaction sources are key challenges with online/mobile applications. Some are significantly more challenging to SNAP agencies responsible for multiple program eligibility, including inability to identify malicious bots and policies/waivers.
• Need for Best Practices: There is limited use of best-practice fraud mitigation methods involving the integration of fraud solutions with cybersecurity and digital customer experience operations. Many agencies are still in the process of integrating cybersecurity and the digital customer experience with fraud prevention efforts. SNAP agencies with oversight over multiple programs are somewhat farther along, though many are still only partially integrated at this point.

"SNAP is more vital than ever as countless Americans grapple with the dual challenges of hunger and escalating food prices," said Haywood Talcove, CEO of LexisNexis Risk Solutions Government.  "It's alarming to see a rise in sophisticated criminal activity, including the use of advanced artificial intelligence and bots preying on critical government aid. Our most recent study brings to light the difficulties agencies confront in ensuring food assistance reaches the right hands amid mounting threats from both domestic and international fraudsters. All government benefit programs urgently need robust identity verification, identity authentication of beneficiaries, and comprehensive asset testing. Through increased vigilance and fraud prevention, we can mitigate the escalating impact of fraud, ensuring resources reach those genuinely in need while safeguarding integrity across all invaluable assistance programs."

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.