LexisNexis Risk Solutions True Cost of Fraud Study: SNAP Report Reveals Every $1 of Fraud Costs Agencies $3.72

Rhea-AI Summary

LexisNexis Risk Solutions released the inaugural True Cost of Fraud Study for Supplemental Nutritional Assistance Program (SNAP) agencies, revealing significant financial impacts from fraud. For every $1 lost, agencies incur $3.72 in additional costs. The rise in mobile transactions, now accounting for 15% of applications, correlates with increased fraud costs, reaching $4.40 per dollar lost for agencies with high mobile submission rates. The report highlights identity fraud, errors, and bot attacks as critical challenges faced by SNAP agencies.

Positive

• The study provides valuable insights into fraud trends affecting SNAP agencies.
• The increased focus on digital identity tools is expected to mitigate growing fraud costs.

Negative

• Fraud losses primarily stem from inadvertent household errors (38%) and unaddressed suspicious cases (34%).
• Agencies accepting over 20% of mobile applications face even higher fraud costs, indicating vulnerability.
• 45% of agencies report an increase in bot attacks, suggesting a significant threat to SNAP integrity.

Mobile and Web Channels Drive Increased Bot and Fraud Attacks for SNAP Agencies 

ATLANTA, Sept. 27, 2022 /PRNewswire/ -- LexisNexis® Risk Solutions today released the inaugural edition of the True Cost of Fraud™ Study for Supplemental Nutritional Assistance Program (SNAP) Agencies which surveyed leadership from 74 state and county agencies that administer SNAP across 35 states. The report also explores key indicators related to fraud detection, prevention, and the benefit allocation experience

Every $1 of benefits lost through fraud costs SNAP agencies $3.72

In addition to analyzing the cost of fraud, the study explores the time and resources expended by SNAP investigators to prevent attacks and mitigate fraud and analyzes current fraud impacts and trends affecting this critical government benefit.

Key Study Findings from True Cost of Fraud Study for SNAP

• Attacks and Costs: Every $1 of benefits lost through fraud costs SNAP agencies $3.72. This includes additional costs related to internal labor (for detection, investigation, reporting) and administrative tasks (for data exchanges, etc.). These attacks are primarily due to identity fraud, eligibility, account takeover, and trafficking from fraudulent Electronic Benefit Transfer (EBT) transactions.
• Digital Transactions Increase Fraud: The cost of fraud is higher for agencies that accept more applications from mobile and web platforms.  Mobile transactions represent an average of 15% across all channels including in-person, online, and call centers. Agencies that have more than 20% of mobile channel submissions experienced an even greater loss - $4.40 for every $1 of benefits lost through fraud.

The True Impact of Fraud Affecting SNAP Agencies

• Unproven Errors Cost Money: The majority of fraud losses stem from inadvertent household errors (38%) and suspicious cases that are not worked given limited resources (34%). Though they represent the largest vector for fraud, many inadvertent errors are never proven due to lack of criminal investigation, or they are lost within the administrative process.
• Bots on the Attack: Agencies with above average mobile-based applications are being increasingly targeted by malicious bots.  45% of these agencies indicate that bot attacks have increased year-over-year.
• Top Fraud Challenges: Identity-related fraud is a leading contributor to SNAP agency fraud losses and is present in 31% of reported cases. In addition to identity theft, 25% of fraud is from account takeovers, 24% from eligibility fraud, and 20% from trafficking of benefits.

"SNAP is a critical public assistance program that helps our most needy populations," said Andrew McClenahan, senior director of Social Services strategy at LexisNexis Risk Solutions. "Unfortunately, there are criminal groups increasingly targeting this important government program. This study gives great insight into where the pain points are, the challenges faced by agencies while administering food assistance, and the impacts from domestic and international fraudsters. Without digital identity tools that provide equitable and expedient access to benefits, the true cost of fraud will continue to grow under the persistent threat of identity thieves, bot attacks, and insufficient technology and manpower resources." 

Download a copy of the True Cost of Fraud Study for SNAP 

About LexisNexis Risk Solutions
LexisNexis Risk Solutions harnesses the power of information and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including government, insurance, financial services and healthcare. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information and analytics for professional and business customers. For more information, please visit www.risk.lexisnexis.com and www.relx.com.

Media Contact:
Paul Eckloff
LexisNexis Risk Solutions
Mobile: +1.202.941.6986
Paul.Eckloff@lnssi.com

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SOURCE LexisNexis Risk Solutions

FAQ

What are the main findings of the True Cost of Fraud Study for SNAP agencies?

The study indicates that for every $1 lost to fraud, SNAP agencies incur $3.72 in additional costs, significantly impacting operational resources.

How do mobile applications affect fraud costs in SNAP agencies?

Agencies with over 20% mobile application submissions experience higher fraud costs, averaging $4.40 for every $1 lost.

What types of fraud are most prevalent in SNAP agencies according to the study?

Identity-related fraud is a leading cause, accounting for 31% of cases, followed by account takeovers and eligibility fraud.

How are bots impacting SNAP agencies as reported in the study?

Agencies with high mobile usage report a 45% increase in bot attacks year-over-year, heightening fraud risks.