Food Stamp Fraud CMP – CIVIL MONEY PENALTY

Food Stamp Fraud CMP – CIVIL MONEY PENALTY

Any retailer that is found in violation of the SNAP program can be given a civil money penalty in lieu of a suspension or disqualification from the program. Understanding why you received this penalty, what it entails, and how much it’s going to cost your business is vital to preventing your suspension or disqualification. Let’s take a look at the specifics of civil money penalties so you are more knowledgeable about what you are dealing with.

What Is the SNAP Program? 

SNAP stands for the Supplemental Nutrition Assistance Program. Most people better know this United States based program as food stamps. This program was designed to help those who are unable to afford healthy foods due to low-income by administering monthly supplemental assistance to purchase nutritious foods for themselves and their families. This program doesn’t cover non-food items, such as toothpaste or shampoo.

This assistance program was initially developed in the 1960s to help those still struggling after the Great Depression. In those initial years, individuals were given actual stamps to exchange at local stores for food. Over the years this program has developed to now include electronic debit cards instead of paper stamps. This allows the USDA, the governing body of SNAP, to better trace transactions and prevent fraud.

What Is Considered Food Stamp Fraud? 

Food stamp fraud can come in many different forms. In all cases, the user or retailer didn’t utilize the program like it was intended to be used by the Government who instituted the program. The most common types of frauds are listed below:

Trafficking – When SNAP benefits are exchanged for cash. 

False Application – When an individual lies on their application to receive more benefits than they are actually entitled to receive. 

Retailer Lying On A SNAP Application – In the event that a retailer was disqualified from the program for abusing it in the past, they are not allowed to reapply to get back into the assistance program.

What Are Civil Money Penalties? 

A civil money penalty, also referred to as CMP for short, is a punitive fine that is imposed on an entity that is deemed to have profited from an unethical activity. These cases are imposed by a civil court. This penalty can be given to both businesses as well as individuals who are found in violation of SNAP. 

Receiving A Charge Letter 

A charge letter, also known as a SNAP violation letter, is sent to those who are found in violation of the program. This letter means that you have 10 days to apply for the issuance of a civil money penalty. If you don’t apply for the penalty by the 10-day deadline, you are automatically suspended from the assistance program. 

The CMP was instituted as a way to lessen the impact of a retailer who faces suspension or full disqualification from SNAP. By paying the penalty, the retailer can remain as part of the assistance program. These fines are all instituted by the USDA and may not exceed $59,000. The penalty that a particular retailer faces will be calculated by the USDA by reviewing the retailer’s EBT transaction data. 

The charge letter will state the amount of money that is owed for the penalty. This can typically be found in the bottom section of the first page of the letter. The penalty is a sum of a few different factors that are outlined in the SNAP regulations. 

Who Qualifies For A Civil Money Penalty (CMP)? 

While paying a penalty is not something that you may particularly want to do, it can save you from disqualification or suspension from SNAP. A retailer must meet the criteria outlined in Section 278.6(i) of the SNAP Regulations to be eligible. All this must be supported by physical or electronic documentation that proves the retailer does, in fact, meet the criteria specified. Let’s see what this criterion is below. 

  • The firm must have a compliance policy in place. This should be in writing which is suggested to be included in the employee handbook. The policy should outline specific guidelines employees must follow. The policy should be updated regularly and dated with each new addition.
  • The compliance policy must have been in effect before all of the alleged violations occurred. The retailer should have written logs of the policies and their updates.
  • The retailer must have a written training program. This program should explain when and how the retailer accepts the EBT benefits. The retailer should be able to procure documents will all signatures from employees who completed the training program and agreed to enforce the guidelines.
  • The managers and owners of the retailer did not benefit in any direct way from the alleged SNAP violations that occurred.

Payment Of Civil Money Penalty 

The USDA will give you a short time frame in which you must pay the civil money penalty to avoid suspension or disqualification from SNAP. After applying for the penalty, you will receive a final determination letter that tells you how much you owe. You are given 30 days from the date of the final determination leter to make a payment and submit all relevant documents. 

If your payment is not received in full by the end of the 30 days or the proper documentation was not received, you surrender your right to the civil money penalty. This will result in suspension or disqualification from the assistance program. The disqualification or suspension is assumed effective immediately after the deadline ends. 

How Is The Civil Money Penalty Calculated? 

The CMP is calculated following specific guidelines in the SNAP regulations. Each penalty will vary from retailer to retailer as business-specific information is included in calculating the penalty. You can expect to pay, at the bare minimum, the amount of money that you gained during the unethical practices that were performed at your business.

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