Certainly there are people who "conspire" to do bad things. Sometimes the "conspiracy" is one guy. Sometimes it's a small group. The only thing I can say with absolutely certainty is that the system will be gamed. How much depends on data that you're just not going to find.
Someone who is creative and fastidious about saving, reusing and recycling would, to your eyes, look like a welfare fraud because they might superficially seem better off then you think they should.
There are enough anecdotes (I could supply a few) to suspect there is a welfare abuse problem - we just don't know the extent of it, as numbers are hard to come by (for reasons explained by the poster you criticize).
Stating the fact that _some_ people take advantage of the system does not make one a heartless bastard.