Buyers Wield Card Data To Ferret Out Fraud

Corporate card data can be key to detecting travel spending fraud, but companies need to sharpen their analysis of that data in order to do so, according to a panel of buyers at Business Travel News' 23rd annual Corporate Travel World conference in May. A supplier, meanwhile, warned of impending changes in the rebate structure upon which many travel buyers have come to rely.

Deb Blowers, category manager for Thousand Oaks, Calif.-based biotechnology company Amgen, said her company recently has enhanced its fraud-detection capabilities through corporate card data. Although card suppliers have their own ways of detecting fraudulent activity, corporate travel buyers should not rely solely on their methods, she said.

"It can't just be about looking at delinquency reports and pushing them out to the card companies," Blowers said. "There are more proactive ways."

Amgen consulted with its card supplier but also looked for other partners within the company, including auditing, legal and human resources as well as benchmarking partners and peers, she said. Past-due notices on Amgen cards almost instantly dropped more than 50 percent after the company began to copy managers and higher-level supervisors on delinquency reports.

Card data also can be used to pinpoint users who might be potential sources of fraud and deserve further investigation, Blowers said. For example, data can isolate the top spenders in the company, those who are delinquent on bills or those who have written checks with insufficient funds. "If they're top spenders, maybe they've also gotten returned checks, and we can start looking for an escalation," she said.

From there, the employees who show up frequently on one or more of those lists can be spotted, and investigations can be turned over to the internal auditing division, she said. Auditing then can look at other such potential fraud sources as expense reports to ensure everything is caught.

"It wasn't that we didn't have policies before, but we have a lot more governance around our program," Blowers said. "In targeting and profiling certain types of cardholder behavior, we've been able to go down in loss percentage of total spend and really created an awareness throughout the organization that we're doing something."

A study released in late June by European travel and expense reporting supplier KDS reaffirmed the prevalence of T&E fraud. The study, based on an online survey of nearly 400 business travelers, found that about one in five admitted to fraud in their expense reporting. Americans were most likely to have cheated their employers with their filings, with about 21.4 percent saying they had cheated on an expense claim. Taxi charges were the most frequently abused item, according to the study.

Outside of fraud, buyers also should be aware of other inaccuracies that can spring into reporting because of a reliance on corporate card data, the buyers said.

"There are some gaps we've seen on the corporate card side," said Leslie Bernauer, senior vice president of New York-based financial firm Lehman Brothers. "You have to be really in tune with reporting, very clear on where you're pulling information from and you have to understand your data very well."

For example, Lehman Brothers noticed an unusually high amount of T&E spending reported as retail spending. A major car service center had been coded as retail spend, so the company worked with that vendor and American Express to get the code properly classified, Bernauer said.

AirPlus International CEO Richard Crum, meanwhile, warned travel buyers to be aware of effects of increasing vendor attention on credit card fees, more governmental intervention and more cases like Australia, where credit card interchange fees are regulated.

"You are going to see credit cards move toward more of a cost-sharing environment, like you see in the agency environment today and like people are thinking is going to happen in the global distribution systems world," AirPlus' Crum said. "Some of the reward programs that are completely funded by the issuer and some of the incentives you're seeing, it's not likely that five or 10 years from now, or maybe even sooner, they'll be funded or available in the way they are today."