How to combat fuel card fraud and protect your fleet

Small businesses rely on their fleets to deliver goods, provide services, and keep operations running smoothly. However, with the rise of theft and fuel card fraud, protecting your valuable assets is more important than ever. In 2023, the NASDAQ reported a total global financial loss of $485.6 billion due to fraud.

Here, we’ll discuss fraud in fleet operations, what’s considered fraud, and various preventive measures for small businesses to take to safeguard their fleets from fraudulent activity.

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What actions are considered fuel card fraud or may indicate fraudulent activity?

Fuel card fraud in the context of fleet operations takes various forms, all involving some form of fuel card misuse or unauthorized use. Here are some examples of fraud or signs that may indicate suspicious activity:

• Unauthorized purchases: Simply put, these are fuel card transactions that the fleet manager didn’t approve.
• Fuel card skimming: This involves copying a card’s information, using a device to create a duplicate card, and then using that card to purchase goods.
• Internal fraud: This type of fraud is committed by employees or insiders who misuse company resources.
• Phantom fill-ups: Reporting a fuel purchase that never actually occurred is called a phantom fill-up, and fraudsters usually pocket the money instead of using it for fuel.
• Overcharging: This involves charging more than the actual cost of a service or product and pocketing the difference.
• Card not present (CNP) fraud: These are fraudulent transactions made without the physical card being present, usually meaning fraudsters have stolen/obtained card information by malicious means.
• Multiple transactions: Several transactions made in quick succession may be a sign that a fraudster is attempting to maximize the use of a stolen or cloned card before you can flag it as suspicious.

Some of these signs and signals of fraud are easier to catch than others. Organizations need strong internal controls. They need tools for regularly monitoring transactions, and robust training programs to educate employees about proper card usage. They also need telematics tracking technology to bring data and insights under one roof.

The risks of fleet fuel card misuse and fraud

Fleet fuel card fraud and misuse can significantly impact an organization. This causes substantial financial losses and operational challenges that are difficult to recover from. Some of the most challenging or damaging aspects of fuel fraud include:

Financial loss

With annual fraud losses estimated at $485.6 million, fleet businesses can save money by addressing this problem. Implementing controls and processes dedicated to fraud awareness and prevention is a good first step. Take Shell, for example, which has a whole team dedicated to fraud detection and prevention. The company estimates that this team is responsible for saving them about US $4 million annually.

Reputational damage

An organization’s reputation leans heavily on its ability to establish and maintain trust with customers. Repeated incidents of fraud or theft can signal vulnerability. This not only puts you at risk of losing customers whose trust may begin to wane but can also act as a beacon for other thieves or fraudsters who may think your fleet is an easy target.

Legal and regulatory consequences

Non-compliance with fuel card regulations can lead to both legal and financial penalties. In some cases, organizations may even be held liable for fraudulent activities.

Data security risks

There is typically lots of sensitive financial information stored on a fuel card. Once compromised, fraudsters can use that data to commit further crimes.

Common weaknesses and vulnerabilities that lead to fleet fuel card fraud

Before implementing preventative measures, small business owners should assess their fleet’s vulnerabilities and get a complete understanding of where there may be opportunities to up security measures.

If you’ve never done something like this before, start with a comprehensive audit of all fleet activities, evaluating your current security measures, identifying weak points in the fleet management process, and recognizing signs of potential security breaches. By understanding where your fleet is most vulnerable, you can develop targeted strategies to enhance security across the organization.

Lack of control over fleet card usage

Without proper oversight, employees may have access to fleet cards they don’t need or may use them for their personal vehicles. Additionally, if cards are not quickly deactivated when employees leave the company or change roles, they could be at risk for further misuse.

Inadequate monitoring and reconciliation of fuel transactions

Without regular reviews of fuel purchases, it becomes easier for discrepancies and unauthorized fuel theft to go unnoticed. Moreover, if fuel receipts are not consistently collected and cross-referenced with card statements, it can be challenging to detect fraudulent activity.

Outdated or ineffective security measures

It’s important to stay up-to-date on the latest security tools to protect yourself. As technology progresses, so do fraud and theft. Thieves are always innovating—even alongside the most modern and robust security tools—to circumvent preventive measures. For instance, if your fleet cards lack chip technology or if you’re not using secure payment terminals at fuel stations, you increase the risk of card skimming and data breaches.

How to catch and/or prevent fraudulent activity

There are lots of effective ways to reduce your fleet’s exposure to fraud risk, manage risks that do seep through, and mitigate future instances, including everything from tech to training.

Utilize technology to monitor actions and mitigate risk

Technology solutions like telematic systems, electronics loading devices (ELDs), and fleet management software are a must for monitoring your fleets and fuel consumption in real-time to detect suspicious activity. Additionally, physical security measures such as GPS tracking devices, alarm systems, dash cams, and steering wheel locks can deter theft and aid in the recovery of stolen vehicles.

Provide ongoing employee training

By educating employees on proper card usage and how to recognize suspicious activity such as unauthorized purchases or multiple transactions, they’re better equipped to report issues promptly. 

Training also reinforces ethical behavior, which can help reduce the likelihood of internal fraud. By becoming and staying informed, employees become a frontline defense against fraudulent activities, ensuring that fuel cards are used responsibly.

Foster a culture of security and accountability

Trust and safety are essential for long-term fleet protection. Start by clearly communicating your company’s security policies and expectations to all employees. Emphasize the importance of their role in maintaining a secure environment and provide comprehensive training on security best practices. Your employees should know how to identify and report suspicious activities, how to properly handle sensitive information, and the consequences of security breaches.

Encourage open communication and transparency regarding security concerns. Employees should feel open to report any security incidents or potential vulnerabilities without fear of punishment, so establish communication channels—anonymous surveys are one great way to allow employees to chime in. Actively listen to their feedback and address any issues promptly, demonstrating your commitment to prioritizing security within the business.

Lastly, lead by example by consistently showing compliance with security protocols and holding yourself and other leaders accountable. Incentivize good behavior by recognizing and rewarding the employees who go above and beyond to maintain security.

How Hammer Construction took control of its expense tracking to detect and mitigate fraud

Over the years, Hammer Construction has faced several fleet management challenges, including fuel theft and expense tracking. It’s fleet of vehicles scattered across hundreds of miles and employees remaining off-site for several weeks at a time made expense management difficult. Unfortunately, the company noticed a trend of fuel theft among their employees resulting in a loss of $500 to $700 a month.

To combat this, they needed a solution to help enhance employee accountability and gain insights into fleet expenses. With the help of WEX ClearView, Hammer Construction has been able to quickly identify trends and patterns, monitor purchasing behavior, and implement corrective actions to improve fleet operations. The user-friendly nature of ClearView helps fleet managers understand complex data, allowing them to make the most informed decisions for their business.

Through the ClearView dashboard, Steve Doss, Cost Control Manager at Hammer Construction, can easily examine fleet card usage in any region, department, service station, or even by employee or vehicle. That level of visibility and control has allowed him to not only improve fleet card efficiency and expenses but also transform employee mentality and accountability regarding fuel card usage.

“ClearView gives us the ability to quickly identify trends and patterns and eliminate the extra risk of theft. Driver mentality has changed from, ‘They will never miss a few gallons here or there.’ Or, ‘That’s just one of the perks of the job.’ To, ‘I better not steal any fuel because (Johnny) was terminated for using the fuel card for his personal vehicle.’” — Steve Doss, Cost Control Manager at Hammer Construction

Along with increased fleet card protection, WEX ClearView helped Hammer Construction access insights that gave them a clearer picture of their business and, ultimately, achieve sustainable growth.

Minimize fraud risk and operate with confidence

WEX speaks the language of small business operators. Whether you’re looking to modernize your insight and reporting efforts, save on fuel costs, or take advantage of the latest GPS tracking technologies, WEX offers solutions to simplify the business of running a business.

Our tools and technologies are designed with fleet businesses in mind, helping managers track, manage, and control their fleet operations with more depth and transparency. Ready to get started? Apply for a fleet card today!

Learn more on how to better manage your small business:

• Marketing tips
• Trends
• Sustainability
• Artificial intelligence

WEX speaks the language of small business operators. Whether you’re looking to modernize your insight and reporting efforts, save on fuel costs or take advantage of the latest GPS tracking technologies, WEX offers solutions to simplify the business of running a business. To learn more about WEX, a dynamic and nimble global organization, please visit our About WEX page.

Apply for a fleet card today!

Source:
Fleet Owner
Fleet Maintenance Magazine

Editorial note: This article was originally published on February 28, 2024, and has been updated for this publication.