Internal processes are needed to protect against the misuse of corporate meeting cards, meeting buyers said, as card issuers do not offer the same protections against fraud as they do for other purchasing cards. Some buyers are limiting the number of meeting cards available to employees, including direct-billing clauses in contracts and incorporating back-end accounting controls to manage their financial liability.
Since such card companies as American Express—the largest meeting card provider—view meeting cards as a higher risk due to the high purchase amounts, they are often unwilling to offer such card protections as reimbursement and investigation into fraud, said buyers. Card issuers also limit their responsibility for card misuse due to the high number of charges negotiated or disputed during reconciliation, buyers said.
Tina Itschner, corporate travel and purchasing manager for HNTB in Kansas City, Mo., said liability with the corporate meeting cards is an acceptable risk at this point.
"Liability is always a concern, but we looked at the flip side of it. You can write a check, which is time-consuming and also expensive in most cases when you factor in the expense reporting process, or we could have employees utilize their own corporate American Express cards," Itschner said. "Then we would write the employee a check, which is more liable."
To protect HNTB from misuse of corporate meeting cards, Itschner limits the number of meeting cards to seven.
"These cards are viewed on a monthly basis by myself for accuracy and to make sure that no one is misappropriating the card. When you have seven cards, it's pretty easy to pull those accounts each month and see if there's any issues going on," she said.
HNTB adopted the cards after meeting buyers began using their own corporate cards to purchase meeting rooms. Reimbursing an employee for a $10,000 charge was determined to be a greater risk than adopting a meeting card, Itschner said.
Itschner said HNTB protects itself in hotel contracts by requiring direct billing. If the hotel puts unauthorized charges on the card, then the contract is breached. Direct billing also helps to negotiate charges, she said.
"We set it up where hotels are billing us first for the charges, then when we make the payment we have them charge the credit card," she said. "We have the flexibility of being able to review the bill, not dealing with a situation where they already have our money."
American Express representatives said liability policies on the meeting card are no different than those on its other purchasing cards, and that fraud and charge disputes are handled according to the circumstances.
"If there is a dispute on the meeting card we solve that on a case-by-case basis," said American Express spokesperson Tracy Naylor. "We do not consider it a high-risk card."
American Express has dominated the meeting card business since the release of its card in 2000 (Meetings Today, Nov. 13, 2000).
Other meeting card issuers include U.S. Bank Visa, released last year (Meetings Today, Apr. 26, 2004),
and MasterCard's stored-value meeting card, released in 2003 (Meetings Today, Jan. 20, 2003).
Rich Del Colle, Lexington, Mass.-based meetings and events supplier manager Americas for Hewlett-Packard Co., said his department uses back-end controls to address liability issues.
HP Financial Services, a revenue-generating department for Hewlett-Packard, set up an internal system to provide what the Amex meeting card did not offer.
"We really didn't expect the business controls piece of it or the liability piece of it to come from Amex in the first place," according to Del Colle. "What we would have liked from Amex was a way to bring the charges right into our general ledger. The card product can't do that. With the internal controls in place and the reconciliation process that HP Financial Services developed, all of those were covered."
HP has used the Amex meeting card for the past six months as part of a pilot program, Del Colle said. The back-end controls in place are similar to business controls on purchase orders.
"The purchase order number, it's just like a card number," he said. "Even in the purchase order system there's probably a limited opportunity for fraud but the business controls are in place to catch and stop it."
Liability issues are easy to overlook when adopting a purchasing card, said Doris Schultz, assistant vice president and travel services manager for New York-based Alliance Capital Management Corp.
"I just assumed until I started reading the contract that the master liability would attach to each type of program and it didn't. You have to really read the contract and be aware that the meeting card programs with the different vendors have different liabilities."
Alliance Capital also solved the issue internally, Schultz said, by first making sure card users are aware of the liability agreement and then setting up processes to protect the company from fraud.
"You have to change your process because the card companies have a policy and you have to work within that," Schultz said.