According to a new report produced by the Government and Accountability Office (GAO), at least $1 billion in food stamp benefits are "trafficked annually," meaning they are fraudulently used. The extent of the fraud is uncertain, the GAO warns, estimating the abuse of the program could be as high as $4.7 billion.

About 20 million lower-income households receive benefits from the $64 billion Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, to buy food. But GAO found that instead of being used for food, many stores are defrauding the program by "selling" cash instead of food.

"For example, a store might give a person $50 in exchange for $100 in benefits – then pocket the difference," GAO explains.

The Food Nutrition Service (FNS) within the U.S. Department of Agriculture oversees SNAP and is responsible for authorizing and overseeing retailers.

The fraud, known as "retailer trafficking," costs taxpayers at least $1 billion. However, the real cost could be "anywhere from $960 million to $4.7 billion," the GAO adds.

The Foundation for Government Accountability (FGA), a Washington, D.C.-based think tank advocating reform, launched a "Stop the Scam initiative" to raise awareness of the widespread problem.

"Welfare fraud is one of the biggest untold stories of the last decade, robbing resources from the truly needy and eroding public trust in the integrity of our welfare programs," Sam Adolphsen, vice president of executive affairs at FGA, said in a statement. "While the bad-actor food stamp retailers exposed in this GAO report are in part to blame, we must not lose sight of the accountability that falls upon the food stamp recipient willing to commit fraud and abuse the system."

The FGA hopes to reduce fraud and abuse at the state level by uncovering discrepancies in each state’s eligibility systems by regularly reviewing their processes.

"Too few states take these crimes seriously, and both states and the federal government can do more on this front," FGA maintains.

The GAO published five recommendations for FNS to follow in order to crack down on SNAP fraud.

They include FNS adding retailer trafficking estimates in future reports, which it has not done.

Likewise, FNS should readdress the factors it uses to identify stores for possible investigation, and evaluate the "accuracy of its assumption of the percentage of SNAP benefits that are trafficked by different types of stores," the GAO states.

Although FNS assigns a risk level to each store when it applies to participate in SNAP, it is not currently using this information to target its reauthorization activities to stores of greatest risk.

"FNS currently reauthorizes all stores on the same 5-year cycle, regardless of risk, although its policy states that it will reauthorize certain high-risk stores annually," GAO states.

FNS officials said they planned to reauthorize a sample of high-risk stores each year but they never did. Officials also stated that they did not document an analysis of the benefits and costs of this practice, "which would be consistent with leading fraud risk management practices," GAO states. As a result, FNS does not have any practices in place to detect early oversight of stores to prevent fraud.

Finally, GAO recommended that FNS should "determine the appropriate scope and time frames for reauthorizing high-risk stores," increase penalties for retail traffickers, and establish performance measures for its trafficking prevention activities.

The Food, Conservation and Energy Act of 2008 gave the USDA the authority to strengthen penalties for retailers that commit fraud, but as of November 2018, FNS had not done so.

"By failing to take timely action to strengthen penalties, FNS has not taken full advantage of an important tool for deterring trafficking," GAO states.

When the GAO confirms what actions FNS has taken in response to its recommendations, it plans to provide updated information to the public, the agency states. It states that the FNS generally agreed with its findings.

The USDA/FNS did not respond to requests to comment for this story.