Food stamps fraudsters using Web as tool

In this economy, food stamps have become a lifeline for millions more Americans. Just this year, the government is spending more than $70 billion on food stamps. But there's a disturbing trend: People are buying and selling the benefits online, as correspondent Michelle Miller reports.

"We had received a lot of complaints about the easy accessibility of these cards," explains Steve Lowe, the director for fraud and accountability at the Washington State Department of Social and Health Services. "It wasn't just, 'Go down on the corner.' You go on the web and make contact and try to make a purchase."

In a hidden camera video filmed by the department in the parking lot of a large store, an undercover agent was seen buying a card with $200 worth of food benefits on it. She purchased it for $100 after finding out about it on Facebook.

"Trafficking, what we call where people are selling their benefits on Craigslist or out in a parking lot, that's a violation of the program," U.S. Department of Agriculture Undersecretary Kevin Concannon said.

The program, administered by the U.S. Department of Agriculture, is officially called the "Supplemental Nutrition Assistance Program", or SNAP, but is commonly known as food stamps.

Trafficking in them is not uncommon. "On the average, we get a complaint every week," Lowe said.

People post on Facebook and Craigslist offering "deals" on SNAP benefits. "We actually have an individual who monitors the social websites," Lowe added.

We went online to see for ourselves and saw offers to buy -- and sell -- on Craigslist.

The USDA has taken an aggressive stance in rooting out and responding to fraud. Last year, the agency conducted up to 850,000 investigations into SNAP program violations.

It sent this letter to Craigslist in August: "In 2009, we were informed that a recipient of SNAP benefits was advertising sale at half price. ... We continue to receive similar complaints that this illegal activity is ongoing. ... The posting of SNAP benefits for sale on the Internet may be subject to criminal penalties."

Craigslist responded by listing the sale of SNAP benefits as prohibited. When we checked, previous postings we had seen on the site had been flagged for removal.

"In the years 2006 to 2008, we found that one cent out of every dollar in the program was being used for trafficking," Concannon said.

More than 45 million Americans currently get SNAP benefits; the number of people receiving them jumped by 3.9 million in the last year alone.

The assistance comes in the form of an electronic benefit card and can only be used for food, which is why they're such a hot commodity and can be sold for cash.

"This program is hard-fought, it's taxpayer funded, it's been carefully thought out over the years, and I personally believe that, when people misuse it in that regard, it becomes a threat to the 45 million people who are playing by the rules," Concannon added.

One reason this kind of fraud is hard to detect is that electronic benefit cards work like ATM cards -- you don't need an ID, just a PIN number.

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