Nutrition Assistance: Additional Guidance Could Assist States in Reducing Risk of Online Sale of Infant Formula
Released: 2015-01-12T00:00:00

Letter

Background

Established as a national program in the mid 1970s, the WIC program is intended to improve the health status of low-income pregnant and postpartum women, infants, and young children by providing supplemental foods and nutrition education. Pregnant and post-partum women, infants, and children up to age 5 are eligible for WIC if they are found to be at nutritional risk and have incomes below certain thresholds.improve birth and dietary outcomes and contain health care costs, and USDA considers WIC to be one of the nation’s most successful and cost- effective nutrition intervention programs.

WIC Food Benefits

In passing the legislation that created WIC, Congress intended the program to assist participants during critical times of growth and development. WIC participants typically receive food benefits—which may include infant formula—in the form of vouchers or checks that can be USDA has established redeemed at state-authorized retail vendors.seven food packages that are designed for different categories and nutritional needs of WIC participants (see fig. 1). The authorized foods must be prescribed from the food packages according to the category and nutritional needs of the participants. Because multiple members of a family may be eligible to receive WIC benefits, individual families could receive more than one food package.

In 2007, USDA issued interim regulations that implemented the first comprehensive revisions to the WIC food packages since 1980. After considering comments received in response to the interim regulations, FNS issued final regulations in 2014. The revisions aligned the food packages with the 2005 Dietary Guidelines for Americans and infant feeding practice guidelines of the American Academy of Pediatrics, and were largely based on recommendations of the IOM, which FNS commissioned to review the food packages.

Infants who are not exclusively breastfeeding can receive formula from WIC until they turn 1 year of age. However, WIC’s authorizing legislation requires that the nutrition education provided to participants include breastfeeding promotion and support. In addition, the Child Nutrition Amendments of 1992 required that USDA establish a program to promote breastfeeding as the best method for infant nutrition. Accordingly, USDA, through regulations and guidance, has emphasized the importance of encouraging participating mothers to breastfeed. WIC regulations require state and local agencies to create policies and procedures to ensure that breastfeeding support and assistance are provided to WIC participants throughout the prenatal and postpartum period.

WIC Program Oversight and Administration

USDA’s role in operating WIC is primarily to provide funding and oversight, and state and local WIC agencies are charged with carrying out most administrative and programmatic functions of the program. Specifically, USDA provides grants to state agencies, which use the funds to reimburse authorized retail vendors for the food purchased by WIC participants and to provide services. As part of its monitoring and oversight obligations, USDA annually reviews the state plan for each state WIC agency, which describes the agency’s objectives and procedures for all aspects of administering WIC for the coming fiscal year. USDA’s review of state plans is one of the federal oversight mechanisms for the program, and state plans provide important information about how states administer WIC. For their part, state agencies are responsible for developing WIC policies and procedures within federal requirements, entering into agreements with local agencies to operate the program, and monitoring and overseeing its implementation by these local agencies. WIC regulations define participant violations, which include the sale of WIC food benefits, and require state agencies to establish procedures to control participant violations. However, the regulations do not specify what steps states should take to prevent participant violations, such as methods for identifying attempted sales of WIC food benefits. The regulations also require state agencies to establish sanctions for participant violations, and require mandatory sanctions for certain types of violations. For example, when a state establishes a claim of $100 or more against a participant who improperly disposed of program benefits—such as through online sales—it must disqualify the participant for 1 year. Beyond these mandatory sanctions, in most cases the regulations do not specify how severely states should sanction participants for particular violations.

The WIC oversight structure is part of the program’s internal controls, which are an integral component of management. Internal control is not one event, but a series of actions and activities that occur on an ongoing basis. As programs change and as agencies strive to improve operational processes and implement new technological developments, management must continually assess and evaluate its internal control to assure that the control activities being used are effective and updated when necessary. Management should design and implement internal control based on the related cost and benefits. Effective internal controls include: (1) communicating information to management and others to enable them to carry out internal control and other responsibilities and (2) assessing the risks agencies face from both external and internal sources.

In Recent Years, USDA Has Further Aligned Formula Amounts with Current Nutrition Science and Infants’ Nutritional Needs

In the past decade, USDA has taken steps to better tailor WIC food packages containing formula to the nutritional needs of participating infants. After reviewing the nutritional needs of WIC participants and food packages in a study contracted by USDA, the IOM recommended changes to the packages—including those containing formula. USDA issued revised regulations in 2007—which state agencies were required to implement at the start of fiscal year 2010—that adopted many of the recommendations from the IOM report to further encourage and support breastfeeding among participating mothers. According to USDA, the revised food packages were developed to better reflect current nutrition science and dietary recommendations than the food packages they were replacing. Among other changes, the revised regulations reduced the amount of formula provided to partially breastfed infants of all ages, delayed when partially breastfed infants may begin receiving formula, and reduced the amount of formula provided to older fully formula-fed infants.

Amount of formula for partially breastfed infants: The revised regulations authorize maximum formula amounts for infant participants that vary by the extent to which the infant is breastfed (see fig. 2). Under the previous regulations, partially breastfed infants could receive up to the same amount of formula as those who were fully formula-fed. Under the revised regulations, “partially breastfed,” for the purposes of assigning the WIC food package, means an infant who is breastfed but also receives formula from the WIC program up to a maximum amount that is approximately half the amount of formula allowed for a fully formula-fed infant. USDA stated that this new category is intended to provide stronger incentives for continued breastfeeding, such as by providing partially breastfeeding mothers with additional quantities and types of supplemental foods—such as whole wheat bread or other whole grains—that are not provided to non-breastfeeding mothers. Because partially breastfed infants require less formula than fully formula- fed infants, this change may have reduced the potential for waste in the program.

Age at which partially breastfed infants receive formula: To further support the successful establishment of breastfeeding, the revised regulations disallow the routine issuance of formula to partially breastfeeding infants during the first month after birth. While mothers of partially breastfed infants are not to automatically receive formula, local agency staff have some discretion and may determine, based on an assessment of the nutritional needs of the infant, that it is appropriate to make a small amount of formula available. According to the IOM, the fact that partially breastfed infants, under previous regulations, could receive up to the same amount of formula from birth as fully formula-fed infants may have interfered with mothers’ milk production and success at continued breastfeeding. Between implementation of the revised regulations in fiscal year 2010 and fiscal year 2014, the number of infant participants who were either partially or fully breastfed increased nearly 4 percent (see fig. 3).

Formula amounts for older fully formula-fed infants: Under the revised regulations, fully formula-fed infants 6 through 11 months of age are authorized to receive less formula than they were authorized to previously. In addition, to introduce infants of this age to a variety of nutritious foods, the revised regulations, for the first time, added infant food fruits and vegetables to their food packages. Because the addition of fruits and vegetables provides infants greater amounts of nutrients, in its 2005 report, IOM determined that less formula is needed for infants that receive these foods. According to USDA, the revised maximum formula amount authorized for these infants is based on a scientific review of the calorie and nutrient needs of infants at this age.

While federal regulations specify the maximum amount of formula different categories of infants are authorized to receive, state and local agency staff have some flexibility in determining precise amounts to provide, depending on an infant’s nutritional needs. Staff at local WIC agencies play a critical role in determining infants’ feeding categories, and they have the authority to provide them with less formula than the maximum amount allowed for each category, if nutritionally warranted. Nutrition specialists, such as physicians or nutritionists, working at the local agency perform nutritional assessments for prospective participants as part of certification procedures. They use the nutritional assessment information to appropriately target food packages to participants. WIC staff also provide regular nutrition and breastfeeding education services to established participants. In the guidance USDA issued in 2009 to assist state and local agency staff in implementing the provisions of the new food package regulations, staff were directed to tailor the amount of infant formula to the assessed needs of breastfed infants rather than to routinely issue food packages with standard quantities of infant formula to these infants. Further, the guidance stated that the maximum amount of formula authorized in the regulations is rarely warranted for partially breastfed infants.

Even with USDA’s guidance, it is possible that some participants receive formula that they do not need or cannot use, and state and local policies on how participants should handle excess formula vary. WIC provided formula to a monthly average of nearly 1.8 million infant participants in 2013, according to USDA. Although federal regulations define the sale of WIC food benefits as a participant violation, one USDA official told us there is no federal guidance that addresses how local agencies should instruct participants to handle unused formula. Rather, according to USDA, state, and local WIC officials, state and local agencies establish their own policies and procedures. Officials from 7 of the 12 states we spoke with told us that participants are instructed to return unused formula to local agencies. Further, officials from the 2 local agencies we spoke with explained that it is relatively common for participants to return infant formula to their local agency, and one added that participants often return formula for health reasons, as pediatricians sometimes prescribe specialized formula because of food allergies. Officials we spoke to from two states said that the returned formula is given to participants who have lost their benefit vouchers. Officials from three other states said that returned formula is donated to food banks or hospitals.

The National Extent of Online Sales of WIC Infant Formula Is Unknown, but Some Participants Attempt Them

USDA does not have data that can be used to determine the national extent of online sales of WIC formula; however, officials in 5 of the 12 states we spoke to said that they have found WIC formula offered for sale online by some participants. USDA officials told us that the department has not conducted a comprehensive study to assess the national extent of online sales. According to the officials, the department does not collect data on this issue, in part because it is not the department’s responsibility to sanction WIC participants for program violations. Rather, it is the responsibility of state agencies to establish procedures to prevent and address participant violations, including attempts to sell WIC food benefits. Of the officials that we spoke to from 12 states, those from 9 states mentioned that the procedures they have established to identify this violation include regularly monitoring online advertisements. Officials in 3 of these states said that through their monitoring efforts, they have found fewer than 0.5 percent of their WIC participants attempting to sell WIC infant formula online. Officials in 2 other states did not estimate percentages but stated that the incidence is low.

Consistent with these state accounts, our own monitoring of a popular e- commerce website for 30 days in four large metropolitan areas found few posts in which individuals explicitly stated they were attempting to sell WIC-provided formula. Specifically, we identified 2,726 posts that included the term “formula,” and 2 of these posts explicitly stated that the origin of the formula was WIC. In both posts, the users indicated they were selling the WIC formula because they had switched to different brands of formula.

A posting from late June 2014 included the container size in the title and stated: “I am looking to sell 5 [brand name] 12.5oz cans (NOT OPENED) because is super picky and does not want to drink it no matter what i do. will drink the kind for some reason. I told my WIC office to switch me to another brand but they say it might take 3 months. Im asking 35$ but best offer will do since the brand I buy is from so Im not looking to make a profit here if you consider each can is 16$ at the store. please text if interested!! A posting from early July 2014 included the brand, type, and container size in the title and stated: “I have 7 powder cans of they dnt expire for another year at least just got them from my wic n we ended up switching formulas so its $65.oo for pick up all 7 cans or $70 if i have to drive.” formula-fed WIC infant participants each month, averaged across all ages.

Beyond the 346 posts that matched these three criteria, we found another 135 that met at least one, but not all, of the criteria. However, since we did not investigate any of these posts further, we do not know if any or all of these 481 posts were attempts to sell WIC formula.

A posting from mid-June 2014 stated: “$10 a can! 14 -12.9 oz Cans of [brand name and type] Formula. Expiration Date is - July 1, 2015. Please take it all. I will not separate the formula! NOT FROM WIC!!! is now 14 months and no longer needs this. Email only please A posting from mid-June 2014: “ Turn A Year Already, and we Just bought her 7 Brand New Cans of . She no longer needs Formula. Selling each Can for $10. Brand New, NOT Open. 12.4 Oz. EXP. 1 March. 2016.”

Through our monitoring efforts, and through interviews with USDA and state and local WIC officials, we identified a number of key challenges associated with distinguishing between WIC-obtained formula sales and other sales:

Each state’s specific WIC-contracted formula brand is typically available for purchase at retail stores by WIC participants and non- WIC participants alike, without an indicator on the packaging that some were provided through WIC.

There are a number of reasons why individuals may have excess formula. For example, a WIC participant may obtain the infant’s full monthly allotment of formula at one time; alternatively, non-WIC parents may purchase formula in bulk at a lower cost to save money. In either case, if the infant then stops drinking that type of formula, parents may attempt to sell the unused formula.

Individuals posting formula for sale online are able to remain relatively anonymous, so WIC staff may not have sufficient information to link the online advertisement with a WIC participant. According to one WIC official we spoke with, staff in that state identify approximately one posting a week with sufficient detail about the seller—such as name or contact information—for staff to pursue. A WIC official from another state said that staff previously used phone numbers to identify WIC participants posting formula for sale, but they believe participants then began to list other people’s phone numbers on posts.

Advertisements for infant formula sales can be numerous online, and formula for sale originates from varied sources. For example, through our literature search, we found multiple news reports on stolen infant formula advertised for sale online.

According to USDA, state, and local WIC officials, because of these challenges, the return on investment for monitoring online sales of WIC infant formula is low. One USDA official noted that it is difficult for states to prove that participants are selling WIC food benefits, which increases the amount of time and effort state staff need to spend to address these cases. Officials from one state WIC agency and one local WIC agency we spoke to said that efforts by state and local agency staff to identify and address online WIC formula sales result in few confirmed cases and draw away scarce resources from other aspects of administering the program. One USDA official said that states that sanction a participant for attempting to sell WIC formula without sufficient evidence that it occurred will likely have the violation overturned during the administrative appeal process. These cases also appear unlikely to result in court involvement, as when we asked the 19 officials from 12 states how these cases were addressed, only one said that a couple had gone through the legal system.should design and implement internal controls based on the related costs and benefits. According to USDA, because of the substantial risks associated with improper payments and fraud related to WIC vendor transactions, both USDA and the states have focused their oversight efforts in recent years on addressing vulnerabilities in the management of this area, rather than focusing on possible participant violations. However, because the use of the Internet as a marketplace has substantially increased in recent years and the national extent of online sales of WIC food benefits is unknown, USDA and the states have insufficient information to assess the benefits of broadening their oversight efforts to include this participant violation, as discussed in more detail later in this report.

USDA Has Provided Limited Assistance to States for Preventing and Addressing Online Sales

USDA has taken steps aimed at clarifying that the online sale of WIC benefits is a participant violation. For example, in 2013, USDA proposed regulations that would expand the definition of program violation to include offering to sell WIC benefits, specifically including sales or attempts made online. Earlier, in 2012, USDA issued guidance to WIC state agencies clarifying that the sale of, or offer to sell, WIC foods verbally, in print, or online is a participant violation.that USDA expects states to sanction and issue claims against participants for all program violations, but it did not provide direction to states on ways to prevent online sales of WIC foods, including formula. That same year, USDA also sent letters to four e-commerce websites— through which individuals advertise the sale of infant formula—requesting This guidance stated that they notify their customers that the sale of WIC benefits is prohibited, and two of the companies agreed to post such a notification.

More generally, USDA has highlighted the importance of ensuring WIC program integrity through guidance issued in recent years aimed at encouraging participants to report WIC program fraud, waste, and abuse to the USDA Office of the Inspector General (OIG). For example, in 2012, USDA disseminated a poster developed by the OIG and attached it to a guidance document describing its purpose, which includes informing WIC participants and staff how to report violations of laws and regulations relating to USDA programs. The following year, USDA issued additional guidance that encouraged states to add contact information for the OIG to WIC checks or vouchers, or to their accompanying folders or sleeves. USDA indicated that the intent of both guidance documents was to increase program integrity by making it easier for participants to report incidents of suspected fraud, waste, and abuse to the OIG. However, neither guidance document specifically directed states to publicize the fact that attempting to sell WIC benefits, either online or elsewhere, qualifies as an activity that should be reported.

WIC Policy Memorandum #2013-4, OIG Hotline Information on WIC Food Instruments (June 10, 2013). require participants be informed of this violation through other means. In our review of rights and responsibilities statements from 25 states’ WIC policy and procedure manuals, we found that 7 did not require local agency staff to inform participants that selling WIC benefits is against program rules. Beyond this approach, some state officials we spoke to reported using other methods to inform participants of this program rule, but some methods may not reach all participants. For example, while officials from two states said that a statement instructing participants not to sell their benefits is printed either on the food voucher or the envelope containing the voucher given to participants, an official from another state said that local agencies in that state display a poster informing participants that selling WIC benefits online is prohibited. Both USDA officials and officials we spoke with from two states noted that some WIC participants do not know that selling food benefits is a program violation. Inconsistent communication to participants about this violation conflicts with federal internal control standards, which call for agency management to ensure that there are adequate means of communicating with external stakeholders that may have a significant impact on the agency achieving its goals. Participants who are unaware of this prohibition may sell excess formula online, thus inappropriately using program resources.

In addition, we found that states vary in the ways they identify attempted sales of WIC formula through monitoring efforts. According to the state and local WIC officials we spoke with, the method of monitoring used to identify online sales of WIC formula and the level of effort devoted to this activity vary across states. For example, while officials from 10 states said that state or local staff perform monitoring activities, an official from another state said that the state contracts with a private investigative firm to perform this task. Also, officials in one state said that a number of staff within the state office, as well as a number of those in local agencies, search social media websites daily. In contrast, officials from another state said that staff spend about a half day each week monitoring online sites for attempted sales of WIC food benefits, and an official from a different state said that staff monitor for such sales only when time allows.

USDA has signaled through recently proposed regulations and policy guidance that it considers the sale of WIC foods—including formula—to be a risk to program integrity; however, the department has not worked with states on developing ways to address these sales. A USDA official told us that the department would like to provide more support to states in pursuing likely cases of participant fraud related to the online sale of WIC food benefits, but it has not yet determined how to be of assistance. USDA officials told us that some of their regional meetings with state WIC staff have included discussions of states’ approaches to monitoring online sales of WIC food benefits, but these meetings were focused broadly on program integrity issues rather than on this type of monitoring. Without general information on monitoring techniques—such as promising search terms or online sites where states may want to focus their efforts—some states may be missing opportunities to better target their limited resources. Federal internal control standards call for agencies to analyze risks from both external and internal sources, and employ mechanisms to identify and deal with any special risks brought on by changes in economic or industry conditions. The standards also note that the attitude and philosophy of management toward control operations such as monitoring can have a profound effect on internal control.

See GAO-14-641. tools. While these efforts may help to assist state WIC staff monitoring attempted online sales of WIC formula to some extent, they are not directly applicable to WIC due to differences in benefit delivery. Specifically, SNAP benefits are provided through an electronic benefits transfer card that can be used to purchase a wide variety of foods at an authorized vendor by swiping the card and entering a personal identification number. Therefore, efforts to identify SNAP benefit trafficking focus on monitoring online sales of these cards and their personal identification numbers, which can be traced back to unique SNAP participants. In contrast, WIC participants generally receive benefits through vouchers that they use to purchase specific foods at an authorized vendor, and they are required to sign the voucher at the time As a result, efforts to identify online sales of WIC benefits of purchase.involve monitoring for formula after it has been purchased, and it is difficult to determine whether the formula was provided through WIC.

42 U.S.C. § 1786(f)(1), 7 C.F.R. § 264.4(a). One related required element is the state agency’s plan for collecting and maintaining information on cases of participant fraud and abuse. We also found that the guidance USDA provides to states on developing their state plans, while relatively detailed in some respects, does not direct states to describe their plan for identifying program violations, including sales of WIC food benefits. area. According to federal internal control standards, agency management needs operating information to determine compliance with laws and regulations. Also, the standards note that factors outside management’s control or influence can affect an agency’s ability to achieve all its goals. Because state agencies are responsible for addressing program violations under the regulations, monitoring the actions they take is key to ensuring program integrity.

Conclusions

WIC provides essential supplemental nutrition and assistance to low- income families, and infant formula, in particular, plays a critical role in the nutritional well-being of the many infant participants receiving it through the program. By better tailoring the food packages, USDA has better aligned the maximum amount of infant formula local agencies are allowed to provide to certain participants. For example, the reduction USDA made to the amount of formula that can be provided to partially breastfed infants reduced the amount of excess formula provided to them, which may have helped reduce opportunities for sales of excess formula. However, it is clear that some participants are selling WIC formula online, inappropriately using program resources. Although the extent of this activity is unknown, explicitly informing WIC participants that such sales are against WIC rules could help improve program integrity by preventing some online sales of WIC infant formula. However, USDA has not required state agencies to inform participants of this prohibition, and some states are not requiring local staff to do so. As a result, some participants may attempt to sell excess WIC formula online without the knowledge that it is against program rules.

Monitoring online classified advertisements for attempted sales of WIC formula is another way to ensure program integrity. As the technological environment has changed with the increased use of e-commerce, actions needed to ensure WIC participants do not inappropriately use infant formula have changed as well. While USDA officials believe that states monitor for online sales of WIC formula, USDA currently does not collect information to confirm this. As a result, USDA is unable to effectively oversee state efforts to control this participant violation, and the agency lacks assurance that efforts are taking place nationwide. State officials we spoke to have responded to the inherent challenges involved in monitoring websites for infant formula sales with varied approaches, which likely yield varied outcomes, and some officials told us the return on investment for their monitoring efforts is low. However, because USDA and state agencies lack information from a national perspective about online sales of WIC food benefits and cost-effective approaches for identifying and addressing these sales, states are likely to be poorly positioned to strike the appropriate balance of costs and benefits when determining how to target their resources to ensure program integrity.

Recommendations for Executive Action

To better ensure that WIC participants are aware of the prohibition against selling WIC formula, and to assist states’ efforts to prevent and address online formula sales, we recommend that the Secretary of Agriculture direct the Administrator of FNS to take the following three actions: Instruct state agencies to include in the rights and responsibilities statement that participants are not allowed to sell WIC food benefits, including online.

Require state agencies to articulate their procedures for identifying attempted sales of WIC food benefits in their WIC state plans and analyze the information to ascertain the national extent of state efforts.

Collect information to help assess the national extent of attempted online sales of WIC formula benefits and determine cost-effective techniques states can use to monitor online classified advertisements.

Agency Comments

We provided a draft of this report to the Secretary of Agriculture for review and comment. In oral comments, USDA officials agreed with all three recommendations. Regarding the first two recommendations, officials noted that the department will incorporate into the WIC regulations requirements that states include the prohibition against the sale of WIC food benefits in participant rights and responsibilities statements and report to USDA in their WIC state plans on their procedures for identifying attempted sales of these benefits. USDA officials noted that because the regulatory process can be lengthy, in the interim period, the department will consider issuing guidance recommending these as best practices to state agencies. Regarding the third recommendation, officials said they would make it a priority to explore options for using available resources to assess the extent of online sales of WIC formula and to identify and share best practices, cost-effective techniques, or new approaches with state agencies to use in monitoring online advertisements. Specifically, they may draw on funds designated for addressing high-priority programmatic issues, and collaborate with stakeholders and other FNS program staff on monitoring strategies. We agree with the department’s planned approaches to addressing the recommendations, and we believe these efforts will help to improve WIC program integrity.

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If you or your staff have any questions concerning this report, please contact me at (202) 512-7215 or brownke@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.

Appendix I: Objectives, Scope, and Methodology

To obtain and evaluate information about online sales of infant formula provided by the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), we used a variety of methods. We reviewed relevant federal laws, regulations, and U.S. Department of Agriculture (USDA) guidance to determine requirements related to the provision of formula to infants receiving WIC, as well as to identify federal, state, and local roles related to preventing and addressing online sales of WIC formula. We also interviewed USDA officials and reviewed USDA’s data on WIC infant participants who breastfeed, which was available for fiscal years 2010 through 2014. As part of our interviews with USDA officials, we assessed the reliability of these data and determined that they were sufficiently reliable for the purpose of this study. To help us understand how federal WIC food requirements were recently modified, we also reviewed a 2005 report published by the National Academies’ Institute of Medicine, since many of the changes were based on the recommendations of this report. To determine the role USDA regulations and guidance play in preventing and addressing online sales of WIC formula, we reviewed a non-generalizable sample of 25 states’ WIC policy and procedure manuals to determine how consistent states’ policies and procedures are in preventing and addressing online formula sales. To obtain some information about the extent of online sales of WIC formula in four metropolitan areas, we conducted monitoring of online classified advertisements to sell formula using one popular e-commerce website. To obtain additional information relevant to our study, we also interviewed an official from the National WIC Association, as well as 19 state and local WIC officials representing 12 states. In addition, we assessed USDA’s controls against GAO standards for Internal Control in the Federal Government.

We conducted this performance audit from April 2014 through December 2014 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Review of State WIC Policies and Procedures

To understand efforts to prevent and address online sales of WIC formula, we reviewed a non-generalizable sample of 25 states’ WIC policy and procedure manuals, including each state’s WIC participant rights and responsibilities statement. We selected these 25 states primarily based on varied size of WIC caseloads and geographic dispersion, and as a group, the states provided services to approximately For each two-thirds of all WIC participants in the U.S in fiscal year 2013.state, we reviewed the sections of the WIC policy and procedure manual relevant to participant violations, as well as the WIC participant rights and responsibilities statement. We analyzed each state’s rights and responsibilities statement to determine if it indicated that (1) the sale of WIC food benefits is a participant violation, and (2) the sale of WIC food benefits online is a participant violation. We reviewed these statements because federal regulations require that all WIC participants be informed of their rights and responsibilities during the certification process. However, federal regulations do not require state agencies to inform participants of this type of program violation. For each state, we also reviewed the state’s policies on addressing the participant violation of selling WIC benefits, such as through written warnings or program disqualifications for a specified time period.

Monitoring of Online Classified Advertisements

To obtain some information on the extent of online sales of WIC formula in four metropolitan areas, we conducted limited monitoring of online classified advertisements to sell formula using one popular e-commerce website that operates local websites. The selected areas included Chicago, IL; Dallas-Fort Worth, TX; Los Angeles, CA; and New York, NY. We selected these areas based on (1) high number of births—defined as over 100,000 or more in the metropolitan area between July 1, 2012 and July 1, 2013, (2) high state WIC caseloads—defined as over 275,000 participants in fiscal year 2013, and (3) geographic dispersion. Our monitoring results are not generalizable to all localities across the United States.

We conducted our monitoring of potential attempts to sell WIC formula during a 30-day period, from mid-June 2014 through mid-July 2014. During that period, we conducted manual search queries of the section of the website specified for infant- and child-related sales on each non- holiday weekday to detect postings containing the key terms “formula” or “WIC.” We also conducted manual search queries of the same section of the website using the name of the formula brand equivalent to the WIC- contracted formula brand specific to the metropolitan area’s state. We reviewed the text of each posting that contained the term “WIC,” as well as each posting containing the state-specific WIC-contracted formula brand. During our reviews of the text of the postings, we also identified those that met additional criteria generally consistent with WIC formula provided to participants. Specifically, the formula type and volume of formula container advertised for sale were equivalent to a type and volume of formula provided to WIC participants in the state in which the posting was made, and the amount of formula advertised for sale represented approximately 85 percent or more of the maximum amount of formula authorized for fully formula-fed infant WIC participants each month, averaged across all ages. We included the latter criterion to help us identify individuals attempting to sell relatively large quantities of formula. While this provides no information about the individuals’ relationship to the WIC program, we included this criterion because participants receiving WIC checks or vouchers for formula may be likely to purchase the infant’s entire monthly allotment of formula at one time.

This may result in WIC participants having multiple cans of unused formula, for example, if the infant switches formulas during the month, as noted in the two posts we found that specifically stated the individuals were attempting to sell WIC formula online. However, a relatively large amount of formula could also indicate intent to traffic WIC benefits in bulk in order to make a profit.

When designing our monitoring approach, we relied on lessons learned by the GAO team that recently conducted a study to assess online sales of other federal nutrition benefits. For example, we based our decision to use the popular e-commerce website on the experience of the other GAO team, which used both that website and a social media website. The team found that monitoring efforts were most effective when using the e- commerce website. Similarly, the other team used both an automated and a manual approach to monitor the e-commerce website but found the manual approach to be more effective—as measured by more postings indicative of potential sales of these benefits—than the automated Our monitoring was conducted to provide some information approach.on the extent to which WIC participants may have attempted to sell WIC formula in four metropolitan areas over 30 days. As a result, we conducted our monitoring activities for illustrative purposes, and we did not intend to use them as evidence for our own investigations into potential WIC participant violations. However, we provided information to USDA officials about the two posts that explicitly stated the formula for sale was from WIC.

Our monitoring approach had some limitations. In the posts we reviewed, individuals might have been selling WIC formula, but did not clearly state in the post that the formula offered for sale was from WIC. As a result, our finding likely undercounts the number of individuals who offered WIC formula for sale in the four metropolitan areas during our monitoring period. Further, because of the general lack of structure to online sales, our findings on the numbers of posts offering formula for sale that met our criteria may over- or under-represent the true number. Specifically, while we excluded duplicate posts we identified on individual days, we were unable to identify duplicate posts across different days. Therefore, if someone posted formula for sale that met our criteria on Tuesday, and then because the formula did not immediately sell, they posted the same formula for sale on Friday, we would have counted those both as posts offering formula for sale. As a result, while our methods provide the total number of formula posts during our monitoring period, excluding duplicate posts on the same day, we cannot be certain that each post represented a new offer of formula for sale. In addition, our findings may understate the total number of posts from individuals attempting to sell WIC formula online because, although we chose search terms we thought individuals would be most likely to use, it is possible some individuals used different terms. We also had to make some assumptions about posts that did not include sufficient detail in the text of the post. For example, we included in our findings posts that did not explicitly state the formula brand name, type, or container volume in the text but included a photo that showed formula matching the criteria we identified. However, it is possible that the photo in some posts did not, in fact, match the formula being offered for sale, resulting in our findings overstating the true number.

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgements

In addition to the contact named above, Rachel Frisk (Assistant Director), Sara Pelton (analyst in charge), and Bryant Torres made key contributions to this report. Other contributors included James Bennett, Susan Bernstein, Sarah Cornetto, Celina Davidson, Michael Hartnett, James Healy, Ashley McCall, Jean McSween, and Almeta Spencer.