SNAP Violation: Retailer Response Guide to Trafficking
So, you have a SNAP Violation Charge Letter, and hopefully you’ve read Part 1 of this guide. Now that you understand what the USDA is accusing you of, and what they’re using to accuse you, it’s time to figure out your response.
You have a 10% chance to win an electronic benefits transfer case like this on your own. That win percentage is what the Department has testified to under oath. Such a low success rate is scary, but true in our experience.
We have a number of stores that call us after they tried to respond to the Charge Letter on their own. By that point, their store has been permanently disqualified and lost its EBT machine. When we are retained late, it is very difficult to figure out where the response went wrong.
But, there is hope. We win cases with all types of stores, and all types of program violation allegations. Our success is because we have a decade of experience with retail food store SNAP violation responses. Our process and our topics are targeted to what each Section Chief wants.
The documents we provide are what each Program Specialist tells us they like to see. The analysis that we send to the USDA contains the factors they must consider. This guide will give you an idea of how we represent our authorized retailers, and avoid monetary penalties that FNS may impose.
What a SNAP Violation Response Should Have
When we prepare a Supplemental Nutrition Assistance Program or SNAP violation response, we’re look to do two things: (1) we want to identify the Department’s confusion and questions about your store; and (2) answer the questions the Department doesn’t know it has.
This is more difficult than it should be. Unfortunately the Charge Letter doesn’t give you much information to respond to. But, based upon the patterns, you can tell where the Department’s biggest concerns are with your store.
In cases with EBT transactions, there are two areas of concern that we always address. The first is: how does your store handle the transactions that were contained in the SNAP violation Charge Letter? The second is: what does your store’s inventory look like? Though these considerations aren’t set out in the regulations, they are important to your SNAP violation case.
Without an explanation for them, the USDA is likely to issue a permanent disqualification.
SNAP Violation: Transaction Logistics
All six of the trafficking SNAP violation transaction categories involve questions about how your store physically transacts business. Some of these questions involve timing: how can the transactions happen so quickly? Why do the SNAP households shop at your store so often?
The Department is looking specifically at how a person could use their EBT card so quickly at your store. We have taken a number of depositions of SNAP personnel and officers, and the uniting theory that they have is that you cant conduct fast transactions without a scanner and a conveyor belt.
So, often we have to explain the logistics:
- How does the food get from the shelf to the counter?
- Is it scanned in or manually rung into the register?
- How does your store accept SNAP benefits?
- How is the food bagged?
- How do the participants carry it out the door?
Some of these answers are simple enough to give, but depending on your program specialist, they may require more. Different program specialists have pet questions, like “how many people are in the store during these transactions?” Or, “how do customers know that you have carts?” Unless you know which questions your program specialist specifically has, the best practice is to try to be as thorough as possible.
SNAP Violation: Inventory Contents
At some point within the last 45-60 days before you received the SNAP violation Charge Letter, there was an on-site inspection conducted by the USDA where they came and took pictures of your store. At the same time, they filled out a survey that identified the contents of your inventory. Part of the survey was to ask you what the highest priced items in your store were. This is the information used to determine whether or not your transaction sizes were reasonable.
Often, we find that our clients didn’t mention bulk pricing (like 12 packs of soda, cases of energy drinks, etc.). Instead, the highest listed item is $6.99 because that is the highest single item that the store sells. In our representation, we don’t simply list the highest priced items. Instead, we identify what the participants want to purchase the most with their food stamps, and we determine what some of the most popular items are – and why.
Now, we have access to government studies and data to support our arguments. However, the most important part of this response is what you (or the store clerks) actually see happening every day. No two businesses are the same, and what makes your store different from your competition probably affects your EBT sales.
Sometimes participants will binge-spend their benefits, buying a hundred dollars of candy, soda and snacks. Other times, they buy food for two or three other people. Occasionally, SNAP participants like to buy cases of Red Bull or monster.
In truth, explanations vary from store to store. To win your case, your explanation here must be supported by sales receipts, invoices or something else that lines up with your argument. We have experience with how to present explanations, and avoid mistakes.
If the USDA Food and Nutrition Service has sent you a violation Charge Letter, they want to disqualify your store. Some violations, like the same of ineligible items, warrants a disqualification of 6 or 12 months. The federal government will disqualify your store for up to five-years if you sold major ineligible items like beer or tobacco on SNAP.
Unlike state agencies, the USDA does not want to negotiate the period of disqualification. They often want the most severe length of disqualification the rules allow. You can find the SNAP disqualification periods in the USDA’s regulations here.
A lot of what we do at Metropolitan Law is confidential and contains sensitive information. We represent hundreds of stores in fraud investigations at any given point. Each SNAP violation defense case we handle contains a wealth of information about the industry and the Department. Our responses aren’t like most other firms, and most of what other firms do is pattern their practices after ours.
So, hear me when I say that there is no magic formula to responding to a Charge Letter. Our practice is to present the most complete picture as we can, and treat our clients’ stores independently. We use data and studies, as well as our knowledge of the different USDA personnel (and our relationships with them) to try to present the most important information that they are looking for.
With respect to our clients: every store owner I represent has my personal cell phone number. We represent clients across 49 states and one U.S. Territory, which means that I travel to my clients, and we schedule meetings at our client’s convenience. There is nothing more important to us than our clients’ stores, and we fight hard in every case.
Next up in our guide is a breakdown of each of the SNAP violation transaction categories.