The black market in SNAP benefits accounts for just over 1% of the total program, which is far less than fraud in other government programs like Medicare and Medicaid. Allegations of fraud, including an informal economy in which food stamps are turned into cash or used to buy liquor, gasoline, or other items besides food have been used to argue that the program is out of control. Officially, the amount of money lost to underground trafficking is estimated to be 1.3% annually. That is down from more than 4% in the 1990s when paper coupons were used. Include erroneous payments to recipients because of government errors or outright lying on applications, and the overall loss to the food stamp program is about 4.7%, according to USDA. While the program’s sheer size means that more than $3 billion is lost to trafficking, fraud, and overpayments each year, the rate is less than other government programs. The Government Accountability Office estimates that Medicare and Medicaid lose nearly 10% to fraud.
Source: New York Times, 12/19/13, SNAP Fraud
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