With losses from food stamp fraud estimated to average around a billion dollars a year, the US Department of Agriculture (USDA) commissioned the creation of an algorithm called ALERT to sift through millions of retail transactions to identify potentially fraudulent activities.
ALERT cast a wide net for food stamp (now called SNAP) cheaters, perhaps too wide. Over 1,600 retailers were banned from receiving SNAP payments in 2017 based on algorithmic assessments alone. But the processes involved in arriving at such assessments are unclear and difficult to challenge. It also puts the burden of proof on the accused.
Claire Brown explains further in this article from The Intercept:
It’s impossible to pin down exactly how many retailers were banned from accepting SNAP dollars due to fraud charges that the government can’t actually prove. But court testimony by a USDA official indicates that, just last year, hundreds of retailers were permanently disqualified from the program based primarily on an algorithmic assessment of their transaction patterns — the same circumstantial evidence that ensnared Mejia. “It’s a jerry-rigged system against small retailers unlike anything I’ve ever seen before,” said Stewart Fried, an attorney who has represented store owners flagged by the algorithm.
The USDA does not bother to justify or even explain the precise sales figures or thresholds that cause retailers to be flagged for investigation. In fact, officials appear not to know how they were developed in the first place…Mejia seems to have been disqualified from the SNAP program based almost entirely on the atypical transaction patterns identified by the algorithm. He said he was never asked to explain these patterns before he was charged with fraud, nor did the agency present him with any evidence that he had traded cash for food stamps. Once accused, he was expected to prove his own innocence and the odds were stacked against him.