How to Prevent Fuel and Fleet Card Fraud
- Tips for preventing fuel and fleet card fraud
- Nearly all fuel-card fraud risks stem from a fleets own drivers instead of external fraud
Fewer than 2% of the R232 million's worth of fuel-card transactions declined by Standard Bank Fleet Management last year were cases of external fraud, where stolen or cloned cards were used by outsiders.
A staggering 98% of fuel-card fraud resulted from drivers trying to pilfer from their own fleets – a depressing thought for fleet managers intent on building a team and fostering a culture of trust in their businesses.
Dr David Molapo, Head of Fleet Management at Standard Bank, says fuel card fraud is a significant problem for fleet managers across South Africa. As a result, organisations that are determined to tackle fuel-card fraud should consider investing in a good fuel card management system and implementing internal policies to prevent and discourage fraud.
“Our research findings clearly demonstrate that fleet managers should not only focus their efforts externally, but also within their organisations, where most of fuel-card fraud is currently being committed.”
He says that a good system requires clear rules and operating procedures that are instilled into every driver and administrator, including the very basic rules:
- Each fuel card is meant for one vehicle only.
- It is meant to pay only for its stipulated purchases - fuel, oil, maintenance or tyres.
- You may not fill up more than the stipulated amount of fuel, and only directly into the fuel tank.
Furthermore, safeguards can be built into your standard operating procedures:
- Set a clear limit on the amount of fuel that may be purchased per day.
- Fuel tanks must be fully replenished and the vehicle driven the maximum distance before refuelling.
- Drivers must fill in the odometer readings themselves rather than leaving it up to the petrol-pump attendant.
- The fuel card must not be left unguarded in the vehicle.
“Educate every new driver about the rules, and have regular refresher sessions to reiterate them. Make it very clear that each driver is responsible for how he handles the fuel card. The rules could be set up in the form of an agreement and indemnity that every driver must sign in order to drive the message home,” advises Dr Molapo.
“If clear rules are the first essential component of a good fuel-card management system, then the second is monitoring and auditing systems in which each vehicle’s statements are routinely checked. Administrators that are responsible for the routine checks must know the system, including warning indicators that flag irregularities.”
Dr Molapo says that clear rules should also be established for the administrators:
- Unused cards must be destroyed,
- Cards must be retrieved when a vehicle is sold or when a driver leaves the company.
- Limit the number of administrators who are allowed to override declined transactions, and set up tight oversight.
“A solid monitoring system will include regular comparisons between each vehicle's fuel consumption and the national average rand-per-kilometre for the same make and model. Higher fuel consumption may indicate fuel-card abuse, or at least a problem with the vehicle,” adds Dr Molapo.
In a good fuel-card management system, monitoring must not only be a task, but should be seen as a responsibility. When every irregularity is queried and followed up with the driver, no matter how small - you are actively conveying the message that fuel-card abuse is simply not worth trying, as the risks of getting caught are too high.
“An important part of fuel card management is the follow-through when a driver is under heavy suspicion of abuse. Simply letting him quietly resign because laying a criminal charge seems to be too much of a hassle sends a message to the other drivers that you can get off lightly. Spending time and even money on investigating fraud can save a fleet a lot more by making it clear to the drivers that fraud will simply not be tolerated.”
Dr Molapo also advises fleet managers that are determined to reduce fuel-card fraud to consider using an effective monitoring system that is able to validate and authorise fleet transactions on-line.
An example of this is Standard Bank’s transaction authorisation system which automatically checks every transaction against a set of rules. For example:
- Have other items apart from fuel been bought?
- Has a minimum period lapsed since the last refueling?
- Has more fuel been bought than the tank capacity of the vehicle?
- Has the card been registered lost or stolen?
“The system will automatically decline a transaction that does not fit such pre-programmed criteria, and the driver will have to phone in to request for an override. Furthermore, it automates important parts of the monitoring that need to be done, while not entirely replacing the required focus that the fleet manager has to maintain on card abuse,” concludes Dr Molapo.