How to Eliminate Fleet Fuel Fraud

An ex-employee for the city of Shreveport, Louisiana was recently sentenced to spend two-and-half years in federal prison for committing fraud by using city credit cards to illegally purchase gasoline. ¹  This instance of fuel fraud took place over two years – from September 2017 to October 2019 – before the former employee was arrested for his crimes, which amounted totally to more than $400,000 of illegal fuel purchases.

Types of Fleet Fuel Fraud

While the majority of fleets will likely not have to worry about extreme instances of fuel fraud like this, it does shed light on what is an ongoing problem for fleet professionals. And this is not only an internal issue, but is also a risk that companies can experience from fraudsters outside of the company.

There are several types of fleet fuel fraud that vary between internal and external, according to Chevron. ²

Internal Fuel Fraud Pain Points

Monitoring for internal fuel fraud is what fleet managers would most likely be trying to track among company drivers. While external fuel fraud issues are also prevalent, its internal instances of fraud that fleet managers will more likely be on the lookout for.

Fleet cards for personal use: This is when drivers use company cards to purchase fuel or maintenance services on personal vehicles or purchase non-fuel items.
Fuel theft: This occurs when fraudsters hide “bladder tanks” inside pick-up trucks or vans that are capable of storing a substantial amount of fuel, often using company-issued cards to store the fuel in these tanks and later sell it for profit. This instance of fraud also mirrors what the aforementioned Shreveport city employee was sentenced to prison for.
Misusing company benefits: When drivers use merchant loyalty programs for personal benefit.

External Fuel Fraud Pain Points

External fuel fraud problems are generally “bigger picture” issues that will be addressed by the larger organization that is operating the fleet, which includes ongoing digital hacking concerns. However, it is useful for fleet managers to understand these problems for the benefit of expanding their knowledge on the issue of fuel fraud, as well as educate their drivers on identifying these issues out in the field.

Credit card skimming/cloning: An increasingly common form of fraud, skimming/cloning, “skimmers,” are disguised electronic devices that fraudsters attach to credit card point-of-sale readers. Fleet managers can reduce this issue by allowing their drivers to only visit trusted and familiar fuel stations in the area.
Lost/stolen “swipe and go” credit cards: Many consumer credit cards are “swipe and go,” allowing anyone to use them, however, most fleet cards require a user to input a unique PIN or ID. However, as mentioned in the aforementioned story from the city worker fraudster, this can also be considered “internal” fraud.
“Phishing” scams: Also known as a business email compromise (or BEC), this occurs when online fraudsters trick fleet card holders via email or text into revealing their card credentials by posing as a trusted source.
Data breaches: This occurs when hackers break into private company databases that contain confidential cardholder information to sell the information to other criminals or create fraudulent accounts.

Recent Uptick in Fuel Fraud

In 2020, 74% of organizations were targets of payment scams, according to the 2021 Association for Financial Professionals Payments Fraud and Control Survey. ³

The survey noted that this is smaller than the shares that were reported in the previous two years, but still indicates that a large percentage of companies continue to be impacted by payments fraud.

And this type of fraud is not expected to subside, according to industry experts. By 2025, gross card fraud globally is projected to reach $35.31 billion, gradually growing along with total payment card volume worldwide, which is expected to climb to $56.182 trillion by 2025, according to Nilson’s latest annual fraud report. ⁴

How Fleets Can Combat Fraud

Much of these fraud instances can be reduced – or eliminated altogether – simply through the act of proper driver education and creating a fleet policy that addresses each of these points. However, a more thorough and effective way to keep track of fuel consumption – and identify potential fraud – among company drivers would be to introduce a robust fleet fuel card program, along with integration of it into a telematics program.

GPS Trackit has fuel card integration capabilities for its GPS vehicle tracking and fleet management system, Fleet Manager, and helps streamline and provide transparency into how drivers pay for fuel at participating stations using a fuel card.⁵ 

The fuel card functionalities of the technology include: 

• The ability to restrict access to specific Merchant Category Codes (MCCs)
• Capability to limit purchases with time-of-day restrictions and numbers of transactions
• Ability to assign different purchase levels and PIN number authorization to each user

These tools can also be used to create fuel card profiles, where certain parameters can be set for each individually to better track purchase behavior. This can help fleets produce more accurate records for reconciliation, allow vehicles with similar traits to be grouped, and offer controls based on business roles, among other other benefits.

Incorporating these technologies will allow fleet managers to better identify signs of fuel card fraud, including excessive fuel spending or transactions, purchase being made outside of established vehicle boundaries, fuel spending that is taking place outside of normal operating hours, along with other suspicious activity.

If you’d like to learn more about how GPS Trackit can help to improve safety, increase productivity and reduce costs for your business, speak with one of our knowledgeable Fleet Advisors at 866-320-5810 or get a quick Custom Quote.

 

Sources Cited: 

(1)www.ktbs.com/news/former-shreveport-employee-sentenced-to-prison-for-credit-card-fraud/article_db8d744c-fc6e-11eb-a7c1-1b3cbcbc13ef.html

(2)www.chevrontexacobusinesscard.com/wp-content/uploads/2021/03/CHE_11458-Rebranding-PDFs-for-microsite_WhitePaper.pdf

(3)www.prnewswire.com/news-releases/survey-increase-in-payments-fraud-activity-attributed-to-the-pandemic-according-to-65-of-financial-professionals-301260380.html

(4) nilsonreport.com/content_promo.php?id_promo=16

(5)gpstrackit.com/blog/gpstrackit-com-enhances-fleet-manager-fuel-card-integration/