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Small Business Insight

The 9 Fastest Ways to Lose Your EBT License (And Worse)

9-fastest-ways-to-lose-your-ebt-license-and-worse

Almost every merchant that sells food knows that accepting SNAP benefits can be a huge boost to business, especially in lower-income areas where benefits are common. According to the Department of Agriculture - Food and Nutrition Service (FNS), the total annual cost of the food stamp program is $69.8 billion. That’s a staggering amount. Even more, 46,670,373 people received SNAP benefits in 2014, with an average monthly benefit of $133.85. That’s about 14% of the population who are on food stamps. Whether you support the program or not, what business owner wouldn’t want a piece of that pie?

Applying for an EBT (Electronic Benefits Transfer) license requires its own process, but maintaining your license and ensuring that you are following the rules and regulations is another challenge altogether. As a business owner, you are responsible for everyone at your business (paid or unpaid) following the rules. Making sure that you run all transactions correctly requires training of employees and knowledge of the common faux pas that can occur. Violations could end up costing you your EBT license, hefty fines, and/or criminal prosecution. On top of that, if you lose your license, the FNS has no qualms about shouting your name from the rooftops as a violator to the community, blemishing your reputation as a business owner. Sound like things you want to avoid? I’d say so. Here are some of the quickest ways to break the rules (and lose your license) when you want to accept EBT.

"According to the Department of Agriculture - Food and Nutrition Service (FNS), the total annual cost of the food stamp program is $69.8 billion. That’s a staggering amount."

1. Trafficking.

This is probably the worst thing you can do in SNAP benefits and, therefore, has the worst repercussions. According to an FNS training guide to SNAP, “It is illegal to give cash in exchange for SNAP benefits. This practice is known as ‘trafficking.’ Refunds due to SNAP customers must be made directly onto the EBT card; never give cash or store credit.”

If you are caught trafficking SNAP/EBT, it results in a permanent disqualification. Fines are also likely (up to $100,000 for EACH violation), forfeiture of property, and possibly criminal prosecution. Normally, SNAP benefits follow a three strike policy, but trafficking is worth all three strikes in one, and then some. So, your best bet is not to do this unless you have EBT cash benefits specifically in place. Ensure all refunds go back on the card, not into cash or store credits.

2. Selling items such as firearms, weapons, or controlled substances.

I did say that trafficking was the worst violation you could do, but selling a gun with SNAP benefits money comes in at a close second. This will also result in a three-strike-in-one-go permanent disqualification and $100,000 penalties for each violation. In other words, if you sell three guns with SNAP, you could be paying $300,000.

3. Selling items such as cigarettes, tobacco, alcohol, or expensive non-food items.

Sales of cigarettes and alcohol will get you a quick 3-5 year disqualification period or a “civil money penalty.” A civil money penalty is when you are charged a fine instead of losing your license because removing EBT from your store would negatively affect the neighborhood. Also note that they can also take the value of what you sold back, so there’s really no point to try to do this.

4. Selling common ineligible items, such as paper goods, toiletries, and junk food on a regular basis.

This is probably one of the more likely issues you may encounter, especially if you don’t have a point-of-sale system that can automatically separate the eligible items from those that are not. Make sure that your employees know which items are eligible, because if the customer doesn’t separate them for you, your employees are in charge of doing so. Running a separate transaction is probably the smartest way to handle this in order to avoid mistakes that could prove costly for your business. If you or your employee is caught, this violation can result in a 6-month to 3-year disqualification or an equivalent civil money penalty.

5. SNAP redemptions exceeding food sales. 

Well, this one is pretty obvious. If you’re redeeming SNAP benefits and the cost totals more than your sale of food, which is what the benefits are used for, you are doing something wrong and the FNS won’t like it.

snap-benefits-food-stamps
Food stamps have some a long way since 1941. By U.S. Department of Agriculture [CC BY 2.0], via Wikimedia Commons

6. Not getting proper authorization.

There are certain protocols involved with accepting an EBT card. For example, the customer always must enter their PIN on their own; you cannot ask for their PIN or enter it for them on the POS. You also cannot accept SNAP benefits for a previous balance or store the information for future purchases. The card must be present to run a transaction. If you try to swipe a card and it cannot read, you can manually key it in. However, if your machine commonly has this issue and you end up manually entering numbers often, you may be contacted or investigated by the FNS for looking suspicious and/or having bad equipment.

7. Not being respectful to SNAP customers.

You are not allowed to put SNAP customers in a separate line, or require them to shop at specific times. You are also not allowed to charge them different prices or refuse to honor coupons, require them to make minimum purchases. All of these will get you a one-way ticket to losing your license.

8. Not cooperating with FNS authorities.

If someone from the FNS (with authorization and credentials) comes to visit your store, you are required to cooperate with them. If they request to see your inventory, take pictures of your store, and ask about the layout. You have to respond to their questions, otherwise, you may lose your license.

9. Not renewing your EBT/SNAP license.

If you receive a letter from the FNS stating that your license needs to be renewed, you must do so or risk losing it. The letter should have an online code and password that you can enter on the FNS website here.

Although this is not an exhaustive list, it does give you a good idea of the top issues SNAP/EBT providers encounter, and the easy steps you can take in order to maintain your license. This also lets you keep the stream of business (and profit) you can gain from accepting benefits from the SNAP program. If you have any questions, we have EBT/SNAP specialists available to answer them at (888) 902-6202 or ebt@getvms.com. You can also call the retailer toll free information number at (877) 823-4369.

 

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