(1) Authorized farmers' markets, authorized growers or authorized farm stores who do not comply with FMNP requirements are subject to sanctions, such as monetary penalties, or disqualification. Prior to disqualification, the department must consider whether the disqualification would create undue hardships for clients.

(2) Noncompliance includes, but is not limited to:

(a) Failing to display the "WIC Farmers' Market Checks Welcome Here" sign each day when selling at authorized farmers' markets or authorized farm stores;

(b) Providing unauthorized food or nonfood items to clients in exchange for the FMNP check;

(c) Charging the department for foods not received by the client;

(d) Providing rain checks or credit to clients in an FMNP transaction;

(e) Giving change to clients if the purchase is less than the value of the FMNP check;

(f) Accepting FMNP checks without having a signed contract with the department;

(g) Accepting FMNP checks at unauthorized farmers' markets or unauthorized farm stores;

(h) Collecting sales tax on FMNP purchases;

(i) Seeking reimbursement from clients for checks not paid by the department; and

(j) Violating the rules of this chapter or the provisions of the contract.

(3) Authorized farmers' markets, authorized growers, and authorized farm stores found in noncompliance will be notified by the department in writing.

(4) If an authorized farmers' market, authorized grower or authorized farm store is subsequently found in noncompliance for the same or a similar reason, the department may impose sanctions, such as monetary penalties or disqualification, without giving the opportunity to correct the problem.

(5) When the department notifies an authorized farmers' market, authorized grower or authorized farm store of a pending adverse action that affects their authorization status in the FMNP, the department must mail written notice at least fifteen days before the effective date of the action. The notice must state what action is being taken, the effective date of the action, and the procedure for requesting an appeal hearing.

(6) The department may deny payment to an authorized grower or an authorized farm store for mishandling FMNP checks.

(7) The department may seek reimbursement from an authorized grower or authorized farm store for payments made on mishandled FMNP checks.

(8) Monetary penalties must be paid to the department within the time period specified in the notice. The department may refer an authorized grower or authorized farm store who fails to pay within the specified time period to a commercial collection agency.

(9) An authorized farmers' market, authorized grower or authorized farm store that has been disqualified from the FMNP may reapply at the end of the disqualification period.

(10) Any trafficking in FMNP checks in any amount must result in disqualification.

(11) An authorized farmers' market, authorized grower or authorized farm store who commits fraud or other unlawful activities are liable for prosecution according to FMNP regulations. (7 C.F.R. 248.10(k).)