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Statement of Need: Under current rules, some firms authorized to redeem SNAP benefits conduct substantial trafficking or other fraudulent SNAP activity in a short period of time, flee with the fraudulently-obtained funds, and ultimately appreciate large profits from this before USDA is able to complete a formal investigation. The ability to withhold some revenues from such violators would depreciate their profits and may discourage this illegal activity.

Summary of the Legal Basis: This rule codifies part of section 4132 of the Food, Conservation and Energy Act of 2008 (Pub. L. 110-246).

Alternatives: Because this proposed rule is under development, alternatives are not yet articulated.

Anticipated Costs and Benefits: This rule will improve SNAP integrity by allowing USDA to take appropriate action against retailers who commit fraud. The Department does not anticipate that this provision will have a significant cost impact.

Risks: Suspension of funds for firms suspected of flagrant program violations runs a small risk that firms that are ultimately found not to have trafficked will temporarily lose the use of these funds. USDA anticipates that this provision will only affect a small subset of firms charged with trafficking, and that the small risk of inappropriate suspensions far outweighs the much larger risk of permitting a firm to profit from trafficking in SNAP benefits while a decision is made on its case.