Fraud is costing taxpayers more than four times the value of the fraudulent benefits themselves, according to a new study.
The fifth annual “True Cost of Fraud” study found that for every $1 in fraudulent losses, agencies spend an additional average of $4.29 on investigations, labor and recovery efforts.
In an exclusive interview with The Center Square, Haywood Talcove, CEO of LexisNexis Risk Solutions’ government group, explained he is hopeful this study shows the amount of fraud happening in government programs.
“For too long, the narrative was there’s no fraud in these programs,” Talcove said. “We started the study to show that they’re wrong. There is a lot of fraud, but you can only find it if you look for it.”
The cost of addressing fraud has reached its highest level in the study’s five-year history, with 77% of the total cost stemming from efforts to detect, investigate and recover losses rather than the stolen benefits themselves. Only 23% of the cost comes directly from fraudulent benefits.
LexisNexis Risk Solutions conducted the study, surveying 150 SNAP agency leaders responsible for administering the program. The company provides data and analytics to help businesses and government agencies assess and manage risks, including fraud.
The findings come as Minnesota faces questions about fraud prevention and oversight in its SNAP program. Since COVID-19, the North Star state has maintained a waiver allowing households to provide signatures by phone, a policy that was recently extended through June 30, 2028.
State Rep. Kristin Robbins, a Republican who chairs the House Fraud Prevention and State Agency Oversight Policy Committee, has raised concerns that the practice creates vulnerabilities in verifying applicants’ identities and detecting fraud, as exclusively reported by The Center Square.
Talcove has more than 20 years of experience in the industry and has testified before Congress numerous times, warning lawmakers about emerging fraud threats.
“What we do is just three simple things: we stop fraud, we catch bad people, and we enable equitable access to government programs,” Talcove said, explaining that he thinks many of the fraud estimates currently cited are grossly understated.
“My estimate right now is it’s a trillion dollars a year,” Talcove said. “The people that are stealing it . . . are not people making mistakes. These are real criminal groups doing real damage to our democracy.”
Talcove argued that programs administered by states but largely funded by the federal government, such as SNAP, lack sufficient financial incentives to prevent fraud because states do not bear the full cost of losses.
“The incentive structure is broken,” he said. “There is a fundamental problem with government that makes it so much different than the private sector . . . You can’t bankrupt government.”
While Minnesota has received the brunt of national attention on fraud, Talcove said it is a widespread, national problem.
“Minnesota is not unique. It happens in every state,” he said. “It is not a Democratic issue or a Republican issue. It happens everywhere. These are organized criminal groups.”
The study found that sophisticated fraud schemes, including some using artificial intelligence, are complicating fraud prevention.
“Taxpayers should understand that . . . these government programs, for the most part, don’t have those safeguards,” Talcove said.
He highlighted a lack of resources to effectively combat fraud in taxpayer-funded programs as a key challenge.
“SNAP has less than 20 investigators in their fraud unit for retailers,” Talcove said. “They just don’t have enough bodies to do the work.”
While continuing to flag concerns, Talcove said he is grateful for the attention the Trump administration has had on fraud in President Donald Trump’s second term.
“I give a lot of credit to Vice President Vance, as well as Scott Brady, for bringing attention to the issue,” he said. “With criminals, if they think they can get away with it, they will get away with it. And what is going on right now is really making a difference in creating an environment where they’re getting a little bit nervous.”