Purchase Card Programs - DoD Employees Caught

Right on the heels of the House Committee on Veterans' Affairs hearing on waste, fraud, and abuse in the VA purchase card program, the DoD-IG (Inspector General) issued a report yesterday finding that DoD cardholders improperly used their Government travel charge cards for personal use at casinos and adult entertainment establishments. During the year ended June 30, 2014, DoD cardholders had 5,300 charges totaling more than $1 million at casinos for personal use and for adult entertainment. These transactions went undetected for several reasons. First, DoD's travel management office provided no help at all in assisting agency program coordinators to identify personal uses. Second, DoD policy does not specifically identify high-risk merchants such as casinos and adult entertainment establishments. And finally, the credit card issuing bank is not required to notify program coordinators or management officials of potential fraudulent activity or suspension of accounts.

Additionally, during the course of their audit the DoD-IG noted the following:

• transactions with no associated travel status
• automated teller machine (ATM) withdrawals that exceeded the overall Meal and INcidental Expense (MI&E) amounts while in a travel status
• transactions at known casinos and adult entertainment establishments
• declined authorization activity that could indicate personal use, and 
• activity outside the required official Government travel locations.

We bring this up because contractors suffer from the same type of abuse found in Government agencies and the recommendations made by the IG may work in contractor locations. So, here are the recommendations.

1. Develop better tools to identify and prevent personal use of Government charge cards. Current technology (data mining) should be able to identify transactions that do not have associated travel status, ATM withdrawals that exceed the MI&E allowance, transactions at known casinos and adult entertainment establishments, and activity outside the official Government travel location.
2. Deactivate travel cards and/or reduce travel card limits for cardholders while not of official travel.
3. Publicize merchant categories that are considered high risk for personal use.
4. Require management to review declined authorization report every month.
5. Require management to use existing tools in the reviews of travel charge activity (there are some tools available but not in wide use).
6. Get the card issuing company to block usage at specific casino locations or adult entertainment establishments.
7. Get the card issuing company to notify management of potential fraudulent use or suspension of  travel cards.

Do you see a potential for any of these recommendations being beneficial to your management of company issued credit cards?

You can read the entire report by clicking here.