Supplemental Nutrition Assistance Program: Trafficking Controls and Fraud Investigations, 22766-22767 [2014-09334]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 79, Number 79 (Thursday, April 24, 2014)]
[Rules and Regulations]
[Pages 22766-22767]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09334]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 274

[FNS-2012-0028]
RIN 0584-AE26


Supplemental Nutrition Assistance Program: Trafficking Controls 
and Fraud Investigations

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Affirmation of interim rule as final rule.

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SUMMARY: The Food and Nutrition Service (FNS) is issuing this 
affirmation of a final rule, without change, of an interim rule that 
amended Supplemental Nutrition Assistance Program (SNAP) regulations, 
to require State agencies to monitor electronic benefit transfer (EBT) 
card replacement requests and send notices to those clients who have 
requested four cards within a 12-month period. The State agency shall 
be exempt from sending this notice if it chooses to exercise the card 
withholding option, in accordance with SNAP regulations, and sends the 
first warning notice upon the household's fourth card replacement 
request.

DATES: Effective Date: On April 24, 2014, the Department is adopting as 
a final rule the amendments to 7 CFR 274.6 in the interim rule 
published at 78 FR 51649, dated August 21, 2013.

FOR FURTHER INFORMATION CONTACT: Jane Duffield, Chief, State 
Administration Branch, Food and Nutrition Service, USDA, 3101 Park 
Center Drive, Room 818, Alexandria, Virginia 22302. Ms. Duffield may be 
reached by telephone at 703-605-4385 or via email at 
Jane.Duffield@fns.usda.gov.

SUPPLEMENTARY INFORMATION: 

Background

    On August 21, 2013, FNS published an interim rule provision at 7 
CFR 274.6(b)(6), that requires State agencies to monitor EBT card 
replacements and issue excessive replacement card notices to clients 
who have requested four card replacements in a 12-month period. FNS' 
decision to issue the interim rule was based on a comment received in 
response to the proposed rule: Supplemental Nutrition Assistance 
Program: Trafficking Controls and Fraud Investigations, published on 
May 30, 2012, at 77 FR 31738. The commenter suggested that FNS propose 
a method for handling multiple card requests that includes monitoring 
EBT card replacements and sending warning notices to those clients 
requesting an excessive amount of EBT cards. This process, initiated by 
North Carolina and implemented by the majority of States, has proven to 
be efficient and cost effective. FNS agreed with the comment and 
amended the regulations in the same section, to require that all States 
implement this method for handling multiple card requests. Since the 
majority of States currently monitor EBT card replacement requests and 
subsequently issue warning notices for four or more requests, FNS does 
not believe this provision will create a substantial burden for States 
overall.
    FNS believes that all State agencies should be monitoring card 
replacement activity and that the requirement to issue an excessive 
replacement card notice provides an important tool for State agencies 
to use in monitoring and preventing trafficking of EBT cards. Based on 
current data, the number of clients requesting five or more cards has 
decreased nationally since many States adopted this practice.
    FNS provided the opportunity for comment through the interim rule 
process because the provision was not included in the proposed rule. 
Comments were solicited for 60 days with an extension, ending November 
6, 2013, due to the government shutdown.
    FNS received five comments on the interim rule. Two commenters 
requested clarification on the starting point for the 12-month 
timeframe for calculating the number of requests for replacement EBT 
cards and whether clients should receive additional notices for 
subsequent 12-month periods. The 12-month timeframe refers to any four 
cards replacements that fall within the past 12-month period. State 
agencies must monitor card replacement requests, and send warning 
notices to clients who request four cards within the past twelve 
months. State agencies should continue to monitor and re-notify clients 
who request additional EBT cards beyond a 12-month period. If 
trafficking is suspected, the State agency must refer cases to the 
State's fraud investigation unit. In all cases, if State agency staff 
suspects that the client's lack of understanding is the reason for 
requesting excessive replacement cards, they must educate the client on 
how to manage the card, rather than refer the case for investigation. 
FNS believes

[[Page 22767]]

regulatory language for this provision is sufficiently clear and is not 
making any modifications.
    Two commenters stated that States should be allowed to implement 
their own systems for monitoring and managing excessive EBT card 
request and set their own standards for calculating excessive requests 
for replacement cards.
    Motivated by the need to come up with a consistent national policy, 
FNS used statistical analysis of SNAP EBT transaction records to arrive 
at the decision to send a warning notice after four EBT card requests 
within 12 months. EBT card transaction activity indicates that, after 
the fourth replacement card, a household's shopping behavior is three 
times more likely to be flagged as potential trafficking by FNS' fraud 
detection system. States have the flexibility to set their own policies 
for EBT card requests beyond this threshold. States may also initiate 
the process sooner than the threshold if a household is suspected of 
committing fraud.
    FNS received one comment indicating that the requirement will 
create an additional burden for caseworkers who must conduct further 
investigations without clear guidelines on what constitutes compliance. 
The commenter further stated that the regulation should specify what 
constitutes an appropriate client explanation and whether State 
agencies can determine what constitutes an appropriate explanation. 
Since 98 percent of SNAP households use three or fewer cards within a 
year, with most (79 percent) using only one card, FNS does not expect 
the warning notice requirement contained in this regulation to create a 
significant burden for State agencies. Additionally, most States 
already monitor card replacements and provide warning notices for 
excessive replacement requests. This regulation does not require 
households to contact the State agency and provide an explanation. FNS 
explains in the preamble for the final regulation that contains the 
card withholding option, that FNS is not specifying which household 
explanations are suspicious and which are satisfactory. FNS believes 
that State agencies are in the best position to determine which cases 
should be referred for investigation based on a client's explanation, 
lack of explanation or suspicious behavior.
    FNS adopts the interim rule as a final rule without change because 
FNS did not receive any comments that indicate a need for change to the 
interim regulation. A summary of comments for the interim regulation 
have been provided in this preamble.

List of Subjects in 7 CFR Part 274

    Food stamps, Grant programs--social programs, Reporting and 
recordkeeping requirements.

PART 274--ISSUANCE AND USE OF PROGRAM BENEFITS

    Accordingly, the Department is adopting as a final rule, without 
change, the interim rule that amended 7 CFR 274.6(b)(6) and was 
published at 78 FR 51649 on August 21, 2013.

    Dated: April 18, 2014.
Yvette S. Jackson,
Acting Administrator, Food and Nutrition Service.
[FR Doc. 2014-09334 Filed 4-23-14; 8:45 am]
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