Unraveling the Web of SNAP/EBT Fraud

Rex Ballard
Dec 18, 2025
6 min read

Political Cartoon showing a fraudster turning EBT cards into cash

Pop-Up Schemes, State Failures, and Federal Crackdowns

In the shadows of America's welfare system, a multi-million-dollar fraud epidemic is eroding the Supplemental Nutrition Assistance Program (SNAP), better known as food stamps. Designed to aid low-income families with Electronic Benefits Transfer (EBT) cards for groceries, SNAP has become a target for exploitation through "pop-up" stores—tiny, understocked outlets redeeming vast sums in benefits via illegal cash swaps. Recent high-profile cases in Massachusetts, Minnesota, Connecticut, and California highlight this crisis, amid claims of rampant abuse costing taxpayers billions. As of December 2025, the Trump administration is intensifying efforts to combat it, exposing partisan divides in program oversight. This article consolidates investigative findings, data, and reforms, revealing how fraud thrives in systemic gaps.

The Pop-Up Fraud Phenomenon: Tiny Stores, Massive Redemptions

At the heart of the scandal are makeshift retailers, some as small as 150 square feet, functioning as fronts for trafficking SNAP benefits. These operations exchange EBT swipes for cash at a fraction of face value, allowing recipients to buy ineligible items while owners launder profits.

A flagship case emerged in Massachusetts on December 17, 2025, where federal prosecutors charged two Haitian nationals with trafficking nearly $7 million over 20 months. Their Boston stores—one under 150 sq ft with minimal inventory—redeemed up to $480,000 monthly, dwarfing legitimate supermarkets. This "shocking and glaring" scheme underscores pop-up fraud's brazenness.

Similar patterns plague other states:

Minnesota: Audits reveal inaccurate SNAP data reporting to the feds, with a 174% benefits spike from 2020-2021 flagged as fraudulent. Scandals like Feeding Our Future involved small delis shifting to child meal fraud, with $77 million in improper payments in 2025.
Connecticut: Retailer trafficking fines and EBT skimming persist, amid organized crime ties.
California: A Romanian suspect stole 36,000 card numbers for multimillion-dollar thefts; small vendors like a Fresno bakery faced $5 million charges.

Nationwide, fraud types include:

Fraud Type	Description	Examples	Estimated Scale
Trafficking (Cash Swaps)	Stores exchange benefits for discounted cash.	MA ($7M in 2 stores); MN shell companies.	Billions annually; $24M daily losses claimed ($8.76 billion annually).
Skimming/Theft	Card data stolen for unauthorized drains.	CA (36,000 cards); CT phishing.	$102M in Q1 FY2025.
Ineligible Claims	Benefits to deceased/duplicates/non-citizens.	180,000 deceased; 500,000 cross-state.	226,000+ claims in 2025.

These schemes exploit lax retailer authorization and data gaps, with immigrant-owned businesses often implicated.

Federal Funding: The Taxpayer Burden

SNAP is overwhelmingly federally funded, amplifying fraud's fiscal impact. The government covers 100% of benefits—totaling $99.8-$100.3 billion in FY2024—and about 50% of administrative costs, making the federal share over 95% overall. Serving 41.7-42 million people monthly, average benefits are $187.20 per participant.

Recent changes via the One Big Beautiful Bill Act (OBBBA) of 2025 introduce state matching for high-error states (over 6% starting 2028), potentially shifting costs and upending budgets—some states face 300%+ increases. The OBBBA introduces a novel state matching requirement for SNAP benefits, shifting from full federal funding to shared costs based on states' payment error rates (PER). This measure incentivizes states to reduce errors—often linked to fraud or administrative lapses—by imposing financial penalties. Starting in federal fiscal year 2028 (October 1, 2027), states must contribute a percentage of their SNAP benefit costs if their PER exceeds 6%. The match is tiered:

Error Rate Threshold	State Match Percentage
Less than 6%	0% (no match required)
6% to less than 8%	5%
8% to less than 10%	10%
10% or greater	15%

For FY2028, states can choose their FY2025 or FY2026 PER for calculation. In subsequent years, the PER from three fiscal years prior is used (e.g., FY2029 uses FY2026 data). Exceptions include delays for high-error states: If a state's PER multiplied by 1.5 equals or exceeds 20%, implementation is postponed to FY2029 or FY2030, allowing time for improvements. Affected states based on recent data include Alaska, D.C., Florida, Georgia, Maryland, New Jersey, New Mexico, New York, and Oregon.

The match is calculated as the specified percentage of total SNAP benefit expenditures in the state, with errors measured via USDA's Quality Control system (sampling cases for over/under-payments exceeding a threshold, e.g., $57 in FY2025, adjusted for inflation). This could reduce federal spending by $41 billion over 10 years, but impacts states by straining budgets—potentially leading to benefit cuts for 300,000 people monthly and affecting child nutrition programs. Critics argue it "weaponizes" errors against vulnerable populations, while proponents see it as accountability for mismanagement.

Map shows estimated SNAP match by state based on current error rates. https://allianceforopportunity.com/federal-snap-match-what-states-should-know/

Trump Administration's War on Fraud

Under President Trump, the USDA is aggressively targeting SNAP abuse. Agriculture Secretary Brooke Rollins has demanded states submit full recipient data (SSNs, DOBs) to detect duplicates, deceased beneficiaries, and cross-state fraud—uncovering 180,000+ cases. Non-compliant states—mostly Democratic-led (22 including CA, NY)—face withheld administrative funds, amid lawsuits claiming privacy violations.

The OBBBA tightens eligibility, mandates reapplications, and reverses expansions, aiming to cut $186 billion over 10 years. Critics argue this "weaponizes hunger," but officials insist fraud is "rampant" and underreported. As mentioned above, the OBBBA contains provisions for states to provide matching funds based on error rates. This is intended to provide incentive for states to crack down on SNAP fraud.

Red vs. Blue: A Partisan Fraud Divide?

Data shows that this SNAP fraud transcends Republican (red) vs. Democrat (blue) boundaries, with evidence of fraud taking place in all 50 states. However, the data does show disparities in SNAP PER with blue states having higher PER scores. Blue states also tend to have a greater number of overall recipients than red states.

FY2024 national PER: 10.93%. Red states average ~8.69%, blue states ~11.68%. High-error states face penalties under OBBBA.

Category	States	Avg. PER	High Examples	Low Examples
Red (Republican Trifecta)	22	8.69%	GA (15.65%), FL (15.13%)	SD (3.28%), ID (3.59%)
Blue (Democratic Trifecta)	15	11.68%	NM (14.61%), NJ (14.33%)	WA (6.06%), HI (6.68%)
Divided	13	~11.20%	AK (24.66%), DC (17.38%)	WI (4.47%), VT (5.13%)

Blue states show higher errors and SNAP usage (12.5% vs. 10.5% participation), but red areas have high rural reliance. Fraud claims top $102M in reported states, with AL (red) leading at 26,000+ claims, followed by CA and NY (blue).

Implications and the Road Ahead

SNAP fraud not only drains $24 million daily ($8.76 billion annually) but undermines aid for 42 million needy Americans. Trump's reforms could save billions but risk disrupting benefits as a result of federal funds being cut off due to states unwillingness to share SNAP benefit data. This has sparked several DOJ lawsuits, that will surely spark partisan battles and likely will end up at the Supreme Court. Notwithstanding the rancor, the data is clear -- tighter controls, such as data sharing and tighter retailer scrutiny are essential to restore integrity.