Who hasn’t fallen for April Fool’s Day prank? Granted, it’s embarrassing, but it’s all in the name of good, harmless fun.
Not so fun nor harmless are the personal purchases made within your own purchasing card (P-Card) program. The problem is, without conscious diligence, a personal purchase could resemble a legitimate, allowed business expense. In the end, you and your P-Card program can end up with a situation worse than a harmless prank for fraudulent cardholders who are bent on purchasing items for their own use.
Looks Are Deceiving
Just because a purchase looks legit from the outside doesn’t mean it is. Fraudsters good at their game are not going to make purchases that blatantly appear to be personal in nature. Instead, they’ll try the following tricks:
Buy items for personal use from your preferred and approved business vendors. For example, if your company buys a lot of computer software from a specific vendor, one extra purchase of a PC program could look, on the surface, very valid — while the cardholder intentions were not.
Hide their personal expenditures within much larger purchase of business items. Cardholders can try to get clever by “wrapping” a personal expense within the receipt of many business expenses, in hopes that it will get overlooked.
Purchase items approved under your policies as business expenses for their own use. Pens, paper pads, sticky notes — office supplies can go unnoticed as personal purchases, ending up in the cardholder’s home instead of the supply cabinet.
Spend only small amounts at a time on personal purchases. A few dollars here, a few dollars there… Who will notice? Without comprehensive reviews, the answer is nobody.
Convincing those within your system to turn a blind eye. Sadly, corruption from within happens. Cardholders in cahoots with those overseeing your P-Card system can convince them to look the other way in return for favors or items.
Watch for Subtle Red Flags
Here are a few “red flags” that — while subtle — can alert your program to personal expenditures.
- Restaurant expenses during an “off” time (a late dinner, for example).
- More than one entree on a dining receipt.
- Hotel receipts for stays over a weekend or during what appears to be an extension of a legitimate business trip.
- Airfare to additional cities between valid business flights.
- Unnecessary duplication of legitimate business purchases (for example, purchases of two separate software licenses or two computer printers for a department instead of just one).
- Overly frequent use on purchases that could be for business (but probably aren’t).
- Small, single purchases under $100.00.
- Purchases at merchants that aren’t typical for business transactions (such as convenient stores, department stores, and supermarkets).
Uncover Personal Purchases to Protect Your Program
This April, don’t play the fool to cardholders trying to pull one (or more) over on you. Allow Card Integrity to use our solutions to uncover fraudulent personal spend in your P-Card program.
We do this by:
- Providing a high level of scrutiny by using customized merchant category codes — or MCCs — in combination with reviews by our professional audit and purchasing team.
- Utilizing special algorithms to recognize trends and patterns in your cardholders’ behavior, to better identify the subtle red flags your own system might be missing.
- Monitoring thousands of daily transactions via our advanced in-house diagnostics, so that even the most mundane and routine expenditures are reviewed for any impropriety.
- Providing, as a third-party review, a simple yet effective way to eliminate fraud from occurring inside your P-Card program.
To start uncovering and eliminating the personal spend within your P-Card program, call Card Integrity at 1-630-501-1507 or contact us via our website.