Can My Business Be Shut Down for SNAP Violations? Legal Options

Can My Business Be Shut Down for SNAP Violations? Legal Options

If your convenience store, grocery store, or other retail food business participates in the Supplemental Nutrition Assistance Program (SNAP), you know those food stamp dollars are vital to your bottom line. But you also know that SNAP comes with a thick rulebook – and the penalties for breaking those rules can be severe.

Getting accused of trafficking SNAP benefits or committing other violations is scary. You may be wondering, can my business be shut down? Will I lose my SNAP license forever? Do I have any way to fight back?

The stakes are high, so you need to understand your risks and your options. This article will walk you through:

• Common SNAP violations
• Penalties your business may face
• How to challenge SNAP disqualification
• Building a strong defense

What Activities Can Lead to SNAP Penalties?

First, it helps to understand what kinds of activities will get you in hot water with the feds. The Supplemental Nutrition Assistance Program (SNAP) is administered by the U.S. Department of Agriculture (USDA). This agency is responsible for authorizing retailers to accept SNAP benefits and for enforcing compliance.

Under SNAP rules, there are strict limits on what can be purchased with food stamp benefits. Only specific food and beverage items are eligible. Retailers cannot provide cash back on EBT card purchases. And they cannot traffic benefits – exchanging SNAP dollars for ineligible items like alcohol, cigarettes, or cash.

Unfortunately, not all retailers and their employees understand the rules. Here are some common SNAP violations that can lead to penalties:

• Trafficking benefits by providing cash back on EBT purchases
• Accepting SNAP benefits for ineligible items like alcohol, tobacco, or paper products
• Failing to properly train staff on SNAP rules
• Providing false information on SNAP retailer application
• “Indirect trafficking,” such as buying inventory from a customer who purchased it on SNAP benefits

Some violations are intentional fraud. But others happen unintentionally, when staff members aren’t properly trained. Either way, the consequences for your business can be severe. The USDA pursues violations aggressively to maintain program integrity.

Penalties for SNAP Violations

If the USDA’s Food and Nutrition Service (FNS) believes your business committed SNAP violations, you’ll receive a “charge letter” explaining the allegations. You can respond before FNS makes a final determination. But if violations are proven, your business faces three potential penalties:

• Permanent disqualification – Your business loses SNAP eligibility and can no longer accept EBT payments. This is devastating for retailers who rely on SNAP revenue.
• Temporary disqualification – SNAP eligibility is revoked for a set time period such as 1-5 years. This also heavily impacts revenue.
• Civil money penalty – Your business pays a fine instead of losing SNAP eligibility. The fine amount depends on the severity of violations.

Which penalty applies depends on the type of violation, evidence against you, and any prior offenses. For example, trafficking typically leads to permanent disqualification. Accepting SNAP benefits for an ineligible item might result in a civil fine.

The stakes are incredibly high, especially with permanent disqualification. Many retailers depend on EBT revenue. Losing that income stream can destroy your business.

How to Challenge SNAP Disqualification

If your business faces disqualification from SNAP, all hope is not lost. You have options to challenge sanctions and preserve your ability to accept EBT payments. But you must act quickly and strategically.

Here are steps to contest SNAP penalties:

1. Respond to the charge letter within 10 days explaining why the allegations are invalid or penalties inappropriate. Provide any evidence that rebuts the charges.
2. If FNS imposes a penalty anyway, you have 30 days to request an administrative review. FNS will examine its own decision.
3. If review fails, you can appeal to a federal or state court within 30 days of the decision. The court takes an independent look.

This appeals process gives you multiple chances to fight sanctions. But it is complex. Having an experienced lawyer in your corner is key.

Building a Strong SNAP Violation Defense

Effectively fighting SNAP disqualification takes strategy. Here are some key elements of a strong defense:

• Argue the violations were unintentional. Show you had a compliance policy and training in place.
• Demonstrate the penalties would harm local SNAP recipients by reducing access to food.
• Highlight mitigating circumstances. For example, a new employee committed violations despite proper training.
• Note this is a first offense and your business immediately took corrective action.
• Submit evidence like training logs, inventory records, and employee affidavits.

The right defense depends on the details of your case. An experienced legal team understands how to navigate SNAP law and build the strongest case for overturning or reducing penalties.

Avoiding Violations and Penalties

The best defense is a good offense. Taking proactive steps can help avoid SNAP violations and penalties in the first place:

• Train all staff thoroughly on SNAP rules and regularly refresh training
• Have robust written policies for properly handling EBT transactions
• Closely monitor point-of-sale systems to detect misuse
  • Require employees to take regular training on properly handling EBT transactions and avoiding violations
  • Perform self-audits to identify any non-compliance issues before they lead to penalties
  • Maintain thorough inventory records to detect and prevent trafficking
  • Have a manager or owner present during all opening and closing procedures
  • Install security cameras to deter and identify improper activities
  • Make sure point-of-sale systems have up-to-date malware protection[1]
  • Set up activity monitoring and alerts on POS devices to detect misuse[2]
  • Restrict employee access to POS functions to prevent unauthorized changes[3]
  • Perform regular audits of POS transaction data to identify anomalies[4]
  • Train staff on cybersecurity best practices to avoid malware infections[5]
  • Control physical access to POS terminals to prevent tampering[6]

  SNAP rules can be complex, but taking proactive measures will help your business remain compliant. Partnering with an experienced lawyer can also help you understand requirements and build a strong sanctions defense if needed. With proper precautions, you can avoid violations that put your SNAP eligibility and business at risk.

  References

  1
  https://www.cisa.gov/news-events/alerts/2014/01/02/malware-targeting-point-sale-systems
  2
  https://media.defense.gov/2022/Jun/29/2003027267/-1/-1/0/APC_GUIDE.PDF
  3
  https://en.wikipedia.org/wiki/Point_of_sale
  4
  https://www.hhs.gov/sites/default/files/ocr/privacy/hipaa/administrative/securityrule/nist800-30.pdf
  5
  https://www.techtarget.com/searchsecurity/feature/Ten-ways-to-prevent-insider-security-threats
  6
  https://www.ftc.gov/business-guidance/resources/data-breach-response-guide-business