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:
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(212) 300-5196- 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 cardpurchases. And they cannot traffic benefits – exchanging SNAP dollars for ineligible items like alcohol, cigarettes, or cash.
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You own a small grocery store that has participated in SNAP for over a decade. You just received a letter from the USDA Food and Nutrition Service stating that your store is being permanently disqualified from SNAP due to allegations that an employee exchanged cash for EBT benefits on multiple occasions.
Can I fight the permanent disqualification and save my business from losing all SNAP revenue?
Under 7 U.S.C. § 2021, you have the right to file an administrative review with the USDA within 10 days of receiving the disqualification notice, and if that fails, you can seek judicial review in federal district court under 7 U.S.C. § 2023. A key defense strategy involves challenging the sufficiency of the USDA's evidence, which often relies on unusual transaction patterns flagged by the Electronic Benefit Transfer system rather than direct proof of trafficking. In cases involving a first offense or where the violations were committed by an employee without the owner's knowledge, we may be able to argue for a civil money penalty under 7 CFR § 278.6 instead of permanent disqualification, which would allow your store to continue accepting SNAP benefits while paying a fine. Time is critical in these cases because missing the 10-day administrative review deadline can severely limit your legal options going forward.
This is general information only. Contact us for advice specific to your situation.
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
