A number of years ago, a financial-industry colleague of mine and I devised a consumer-finance alternative to check-cashing services, payday loans, and rent-to-own stores.

The plan we developed was designed to provide a gateway to capital for consumers with limited assets and low income.

Our inverse principle was that everyone, no matter how poor, owns something of value. and the poorer the consumer the more valuable that thing is to him. And if that thing were used to collateralize a loan, the more likely the borrower would be to repay the loan.

What is needed is a forward-thinking financial institution willing to extend credit based on such collateral. Since the collateral, whether an old car, a personal assistant, or a mobile phone is the one thing that allows the consumer to tolerate his poverty, it would be highly unlikely that he will default on the small loan.

This will allow the borrower to escape the maw of check cashers, payday lenders and and others in the non-bank financial-service industry that provide capital to poorer consumers at an unbearable cost. Under this scenario, there is no vig, no hidden cost to the borrower.

The financial institution could be a bank, credit union, or even a check casher.

The oldest form of fraud (thinking that no one is watching you) is being defeated by modern technology (data analytics) employed by the Department of Agriculture as it oversees the SNAP (Supplemental Nutrition Assistance Program) program.

In 2018,  the Food and Nutrition Service of the Department used data analytics to examine delivery route retailers to help confirm which ones were more likely to be skirting SNAP regulations. The G men focused on the authorization and reauthorization processes for the delivery route sellers most at risk of fraud.

In a statement, FNS points out that not all delivery route vendors, which are an important part of the delivery plan for SNAP benefits, violate the program regulations. FNS notes that  legitimate delivery route retailers serve many SNAP clients well. Delivery route venders provide a valuable service especially in rural areas.

In its statement, USDA states that it takes program integrity seriously. Brandon Lipps, Acting Deputy Under Secretary for Food, Nutrition, and Consumer Services, says that when the government’s data analysis showed that some bad actors may have invaded the delivery route network, FNS immediately began acting to ferret them out of the program and secure the reauthorization process.

Acting Deputy Under Secretary Lipps says that FNS will continue its data analysis strategy to ensure that tax dollars supporting the SNAP program are wisely used and remain a central piece of USDA’s daily operations.

This page has commented frequently on FNS’s efforts to attack fraud that may have penetrated nutrition programs, like SNAP.

SNAP is the program formerly known at food stamps.