We treat you like family, we're here for you.

Can My Business Be Shut Down for Food Stamp Trafficking?

If your business participates in the Supplemental Nutrition Assistance Program (SNAP), you must follow the rules that USDA enforces. Trafficking SNAP benefits can lead to huge fines for your store, permanent disqualification for being able to get SNAP for your store, and even criminal charges depending on the amount of fraud alleged. For some businesses, getting busted for trafficking can mean shutting down for good.

What is Food Stamp Trafficking?

Understanding SNAP Benefit Exchange Violations

Trafficking SNAP benefits means exchanging SNAP benefits for cash or non-food items. Here are some examples of what USDA means when it says you are accused of SNAP benefit tracking:

• Giving a customer cash for 0 in SNAP benefits
• Trading benefits for cigarettes, liquor, or other restricted items
• Using benefits to purchase inventory for your business
• Buying benefits from recipients for cash

It doesn’t matter if it was on purpose or by accident. Any unauthorized exchange is considered trafficking.

Trafficking Penalties for Retailers

Federal Penalties Under 7 CFR § 278.6

If your business gets caught trafficking food stamps, you’ll face stiff penalties:

• 1st offense – $15,000 fine and 1 year disqualification
• 2nd offense – $30,000 fine and 3 year disqualification
• 3rd offense – $60,000 fine and permanent disqualification

After a third trafficking offense, your business will be banned from SNAP for life. This could easily force you to shut down. For many businesses, SNAP represents almost 1/3 of their revenue, if not more. In some lower income places, SNAP represents 50% or more of their overall revenue.

Getting Charged Criminally

Federal Criminal Prosecution for SNAP Violations

Trafficking SNAP benefits is a crime, regardless of where you are in the country. Retailers who commit SNAP violations can face federal charges and state charges:

• Up to 5 years in prison
• Fines up to $250,000
• Forfeiture of assets involved in the crime

How Investigators Prove SNAP Trafficking

USDA Investigation Methods and Evidence Collection

Investigators use many underhanded tactics to catch trafficking. Here are some examples:

• Analyzing your store’s SNAP transaction data for suspicious patterns
• Sending in undercover informants to attempt illegal transactions
• Watching security camera footage for prohibited exchanges
• Interviewing customers and employees as witnesses

Once they gather evidence, you’ll have a hard time fighting the charges.

Getting Permanently Disqualified

Permanent SNAP Disqualification Triggers

Your business will be permanently banned from SNAP if you:

• Get caught trafficking 3 times
• Trade firearms, ammo, or explosives for benefits
• Sell benefits to other retailers
• Trade benefits for controlled substances like drugs

Permanent disqualification is basically a death sentence for many stores. Don’t risk it.

Losing Your SNAP License

Consequences of FNS License Revocation

If your store is disqualified from SNAP, you’ll have to turn in your FNS license. This means:

• You can no longer accept or redeem SNAP benefits
• All inventory bought with SNAP must be destroyed
• You must remove any references to SNAP in your store
• Your EBT point-of-sale device will be disabled

Losing your SNAP license cripples many businesses. Trafficking is never worth it.

Fighting SNAP Disqualification

Legal Defense Strategies Against SNAP Violations

If your store is accused of trafficking, a lawyer can help fight disqualification by:

• Filing appeals and requesting hearings
• Arguing rogue employees acted without your knowledge
• Presenting evidence of compliance training and oversight
• Negotiating for a shorter disqualification period

A skilled lawyer gives you the best shot at avoiding permanent SNAP loss.

Real-Life Trafficking Horror Stories

Case Studies: Businesses Destroyed by SNAP Violations

Think it can’t happen to you? Check out these real-life cases:

Joe’s Corner Store

Joe’s cashiers were caught exchanging SNAP for cigarettes. The store was disqualified from SNAP for 2 years and fined ,000. Joe lost over 30% of his business and barely avoided bankruptcy.

Yang’s Grocery

An employee trafficked benefits without Yang’s knowledge. The store was permanently banned from SNAP. Yang was forced to shut down after losing over half his revenue.

A&A Market

Investigators discovered A&A buying food stamp benefits from recipients to stock their inventory. The owner pled guilty to federal charges. A&A went out of business.

As you can see, trafficking can easily destroy a store. Protect yourself.

Avoiding Trafficking Violations

Best Practices for SNAP Compliance

Here are some best practices to safeguard your business:

• Train employees on SNAP rules and how to spot trafficking
• Have clear policies forbidding unauthorized use of benefits
• Conduct self-audits of inventory and transactions
• Monitor and approve high-risk SNAP sales
• Report suspicious customer activity to SNAP fraud hotline

Documenting compliance efforts strengthens your defense if accused.

Responding to Trafficking Allegations

Strategic Response to USDA Charge Letters

If investigators accuse your business of trafficking, here are some tips:

• Remain calm and don’t get defensive
• Be cooperative to demonstrate you’ve got nothing to hide
• Politely ask for details on the allegations
• Consult an experienced SNAP attorney right away
• Follow your lawyer’s advice about responding

Having an expert lawyer gives you the best shot at defending against allegations.

Avoiding Employee Trafficking

Preventing Staff-Initiated SNAP Violations

Here are some ways to prevent employee trafficking:

• Screen new hires for any red flags
• Train staff regularly on SNAP policies
• Require multiple approvals for high-risk SNAP sales
• Monitor inventory levels to catch unauthorized purchases
• Watch for suspicious transaction patterns

Oversight and accountability deters employee trafficking schemes.

Maintaining SNAP Compliance

Ongoing Compliance Requirements Under 7 CFR § 278

Here are some tips for staying compliant with SNAP rules:

• Regularly review FNS retailer requirements
• Document all employee training on SNAP policies
• Conduct self-audits of inventory, transactions, etc.
• Address any non-compliance issues immediately
• Cooperate fully if you receive a compliance visit

Staying up-to-date and accountable shows you take SNAP seriously.

Avoiding Permanent SNAP Disqualification

Critical Steps to Protect Your SNAP Authorization

Here are some ways to avoid a lifetime SNAP ban:

• Never exchange benefits for cash, drugs, weapons, etc.
• Don’t purchase benefits from recipients
• Immediately address any suspected trafficking
• Cooperate fully if you are investigated
• Consult a lawyer at the first sign of trouble

Permanent disqualification is difficult to reverse. Don’t let violations spiral out of control.

Getting Legal Help

When to Consult a SNAP Defense Attorney

If your business is accused of trafficking, consult an experienced SNAP attorney immediately. Here’s how they can help:

• Review if the investigation was done properly
• Determine if the evidence truly proves intent
• Negotiate lower fines or shorter disqualification
• File appeals to overturn decisions

The right lawyer can get charges dismissed or significantly reduced.

Conclusion

Protecting Your Business from SNAP Trafficking Penalties

Trafficking SNAP benefits is very high risk for retailers. Getting caught can result in crippling penalties, permanent disqualification, and even criminal prosecution. For some stores, these consequences force them to shut down.