May 28, 2009
-
News: Feds Realize CC Misuse
A number of years ago the Federal Government made the decision to issue credit cards to employees for business travel expenses. The move was unusual for the government, however, a normal practice for most large organizations. Unfortunately the practice has backfired for the Feds with the recent discoveries of employee credit card misuse. The Associated Press recently reported on a survey conducted by the Congressional Research Service (CRS) which revealed some of the incidents. For example, there are over three million employees in the Defense Department. Most of those employees travel a great deal and have government credit cards issued to them. The report cited multiple cases where employees had used the government cards to purchase airline tickets for personal use; failed to apply for refunds on airline tickets that were not used; and other miscellaneous personal charges. One of the most abusive incidents involved a Federal Aviation Administration (FAA) employee who charged his laser eye surgery on his government issued card.
In addition to the abusive spending, many employees were failing to pay their bills according to the terms of the contracts. Not only were individual employees late in paying their bills, but the government agencies responsible for paying some credit card bills had a delinquency rate three times that of the individual. The delinquency also contributes to a large loss of reward benefits because many of the credit card terms allocate rewards based on payment compliance. Therefore, government agencies that are consistently delinquent have been missing out on valuable income.
Government agencies have tried to automate their travel systems to make it easier for employees to plan travel. Issuing credit cards to employees makes it easier for them to access online websites to schedule trips. However, this convenience has contributed to much of the card abuse. The fact that the Navy has just awarded a $3.3 million contract to upgrade their current system would be a strong indication that government agencies have no plans on reversing the current policy of providing government issued cards to employees.