Gas Theft and Fleet Fuel Fraud Up with Higher Gas Prices

Former employee Lindim Asipi of Waterbury, Connecticut is currently awaiting sentencing after pleading guilty to wire fraud in his theft of funds from the United States Postal Service. He faces a maximum sentence of 20 years. According to Leonard Boyole, acting U.S. Attorney for the District of Connecticut, “Asipi was a motor vehicle service driver for the USPS based in Waterbury, and the USPS provided Asipi with a fleet credit card that enabled him to purchase fuel. 

Between approximately January 2019 and June 2020, Asipi conducted several hundred fraudulent transactions with his fleet credit card to obtain cash from gas stations without purchasing fuel.  To execute these fraudulent transactions, Asipi used his assigned personal identification number (PIN), as well as the PIN of another USPS driver who was unaware of Asipi’s scheme.” 

In other words, the Postal Service was the victim of fleet fuel fraud. 

A Kentucky man who stole gas from a Jenkins Police Department patrol car prompted the police department fleet to switch to lockable gas caps. The man was arrested after posting a photo of the fuel theft to Facebook.

Just as spikes in gas prices can hit American consumers hard in their pocketbooks, they can be disastrous for companies in the transportation industry.

Police in the US are warning drivers and businesses to protect their vehicles from possible people stealing gas as March regular gas prices surged to $4.32, the highest prices in over a decade. Diesel fuel for fleet trucks rose to $5.13 per gallon. Sanctions against oil producers in Russia after its invasion of Ukraine have pushed up fuel prices for both consumers and field service fleet businesses.

How does fuel fraud and fuel theft hurt field service truck fleets?

The payment-card industry estimates it lost $500 million on fuel-related fraud for 2013 according to a Wall Street Journal article. An older estimate from 2008 put fuel theft cost to the trucking industry at $8 billion in the United States alone (according to the RFID Switchboard).

Assetworks estimates fuel theft at between 5 and 10 percent of a fleet’s annual consumption. If you burned a million gallons last year, you may have lost between 50,000 to 100,000 gallons to theft or fraud. Losing this much diesel fuel at the current $5.13 per gallon price, would waste $513,000 per year. This is a large enough loss to destroy your business.

Fuel Theft Increases One of the Largest Costs for Field Service Fleets

A 2020 survey by American Transport Research Institute found that when truck fuel costs and truck MPG were broken out across the gross vehicle weight, the average operating weight in 2019 was approximately 63,000 pounds. Generally, as truck weights increase, fuel MPG decreases, with some mild variation.

What portion of fleet truck costs come from fuel and gas?

The destructive impact of fuel theft and fraud is obvious when you see that fleet truck fuel costs are the second largest operating cost after driver pay and benefits. This data from the 2020 survey by American Transport Research Institute breaks out the truck operating cost per hour.

What is fuel fraud?

Simply put, fleet fuel fraud is theft. In a survey, over 50% of fleet managers and transportation accountants reported that fuel costs exceeded their expectations somewhat often or very frequently. This can happen for a variety of reasons, but it is important to note that a majority of those surveyed also reported that they were somewhat or very concerned about fuel theft occurring in their fleets. Fuel fraud is real. Spotting and preventing it must be a priority.

What are the types of fleet fuel fraud?

Fleet fuel fraud can appear in a variety of ways. In one extreme example, a Florida trucker was accused of using a dummy gas tank and an electronic device, to trick gas pumps into pumping fuel without charging for the fuel. A motor carrier safety inspector for the Oregon Dept. of Transportation became suspicious of a large, unusual fuel tank under the truck’s trailer. Police said they believe the truck driver actually pumped 100 gallons of fuel into the dummy tank at a truck stop, but only paid for 1.5 gallons. Police found the driver used a device that hooks up to the fuel pump and stops the pump from registering gallons pumped.

“Bladder tanks” hidden in vans and trucks are one form of fuel theft; other instances of fleet fuel fraud are more subtle. Some examples to be aware of include:

False mileage reports, also known as mileage creeping: This occurs when a driver inflates mileage on fuel reimbursements in order to receive more than they are actually owed.
Fuel siphoning: It’s easy enough for someone with access to a full tank to siphon gas to a private vehicle when no one’s looking.
Fuel card fraud: When your driver shares their business fuel card or lies about transactions, this is fuel card fraud.
Fuel deceit: Common forms of fuel deceit include filling non-business vehicles or containers for personal use.
Benefit theft: If a fuel card offers reward points, you’re paying for them and they belong to your company unless you specifically offer them to drivers as a benefit. Claiming and using them without prior authorization is theft.

How is gas stolen from fleet truck fuel tanks?

Tampering or removing the fuel cap is the easiest way to access the fuel in the tank. Even if provided with locking, it seems that generic cap keys can be simply purchased on the internet. These gas cap keys have a double ended design allowing them to open gas caps of almost any vehicle. Once the cap has been removed, fuel is simply siphoned by inserting a flexible tube in the tank and blowing air into it.

Tank puncturing. Puncturing the tank and syphoning or simply collecting dropping fuel.

Can you buy other things on a fuel card?

Yes. It’s important to monitor driver fuel card use to ensure that purchases include only fuel for your business, and no snacks, drinks, tobacco products, or personal items or fuel purchases.

Can a fuel card be cloned?

Unfortunately, the answer to this question is also yes. In 2018, a Colorado grand jury indicted a ring of suspects whose elaborate and long-term scheme involved not only bladder tanks but also fake fuel cards that had been cloned – illegally replicated – from legitimate sources. Not only are cloned cards a concern for fleet owners and managers, but skimmers are as well. Skimmers are real-looking electronic devices that criminals attach to credit card point-of-sale readers to steal credit card numbers for their nefarious purposes.

How can fuel fraud be prevented?

There are many ways for business owners and managers to protect themselves from fuel fraud. Consider implementing some or all of these suggestions:

• Create clear company policies designed to prevent theft and fraud by those inside and outside your organization. 
• Delineate consequences. Make it clear to your staff that fuel fraud is not only a breach of trust; it’s criminal. Not only will those who engage in such behavior lose their jobs, they will be prosecuted.
• Invest in fleet tracking software and dash cams that enable you to monitor the location of your assets and behavior of your employees at all times.
• Be vigilant. Monitor mileage readings and compare them to driver reports. Is the driver filing up more often than you expect? Has the driver purchased the correct type of fuel? Do the number of gallons match or exceed the tank capacity of the vehicle? Is the vehicle’s MPG surprisingly low? Any of these can point to fuel fraud.
• If you’re still reimbursing drivers for fuel, introduce a fuel card program so that you can more accurately monitor all expenses. 
• Put spending caps in place. Talk to your fuel card company and limit the dollar or gallon amount of each purchase.
• Implement individual PINs or ID numbers on any “swipe and go cards” to prevent their use by thieves or unauthorized personnel. 
• Prioritize trusted and familiar fuel stations, and instruct your drivers to make purchases at those locations.
• Insist that card holders refer any incoming calls or emails about fuel cards to a designated and authorized staff member. Often these communications are “phishing” scams designed to get someone to reveal identification that will enable a theft. Sometimes, just putting them off is enough discouragement to prevent a problem.
• Educate your drivers. Point out opportunities for data breaches and teach them about the other ways in which criminals steal fuel and information.

GPS Trackit offers fuel card integration capabilities as part of 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. 

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 you know the whereabouts of your equipment and assets, 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

https://www.fleetfinancials.com/300823/how-fuel-fraud-affects-the-fleet-industry

https://www.softwareadvice.com/resources/fleet-management-improve-fuel-efficiency/

https://www.wsj.com/articles/credit-card-fraudsters-pump-gas-stations-for-profit-1441253132