Some agencies have aggressive agenda for curbing charge card abuse

While lawmakers and government watchdogs complain about misuse, abuse and fraud in the federal travel and purchase card programs, several agencies are using aggressive oversight and other tools to manage their programs.

On Thursday, several agency officials shared how they are reducing delinquencies and fraudulent card use at a forum sponsored by Visa USA. MasterCard held a similar event last month. Federal employees must use government charge cards, instead of personal credit cards, for travel expenses. Purchase cards were established to simplify the procurement process for relatively small, routine purchases, and transactions are supposed to be capped at $2,500.

"This brings together people from the agencies who either set policy for or operate the travel card and purchase card programs," said Dennis Fischer, a vice president of government services at Visa USA. "Our objective is really to have senior policy people speak to the group, have people from agencies share with the group best practices and things that they are doing."

Numerous investigations by the General Accounting Office over the past three years revealed that military and civilian employees were abusing the cards, using them to pay for prostitutes, golf games, clothes, mortgage payments, personal trips, and a host of other things, including photos of Elvis Presley bought at Graceland. Delinquent cardholders also have pocketed money the government reimbursed them rather than pay card charges, written bad checks to cover charge card payments and allowed the cards to be charged off by the bank.

According to the General Services Administration, at least seven departments and agencies consistently average 3 percent or less delinquency on individually billed travel card accounts, including the Housing and Urban Development, Justice, Health and Human Services departments, Social Security Administration, Federal Emergency Management Agency and the Nuclear Regulatory Commission. GSA, which oversees the government purchase and travel card programs, was also on the list. Another handful of agencies have significantly reduced the number of supervisors responsible for overseeing employee purchase card accounts, GSA said, increasing the level of controls.

Sue McIver, director of the services acquisition center under GSA's Federal Supply Center, said, "What are these agencies doing to keep their delinquency rates so low? They emphasize training, implement strong program controls, take full advantage of the electronic access system reporting tools to monitor cardholder delinquency and take appropriate corrective action to minimize delinquency, cancel inactive cards, and enforce their program policies through appropriate disciplinary action." McIver adds that, "These agencies have also built strong partnerships with their bankcard providers, and work strategically with their bank partners to ensure continued low delinquency."

According to Fischer, a commitment from leadership also led to program improvements.

"One of the most effective strategies from a few years ago is over at FEMA, if you were more than 60 days due with the bill, you were called for an appointment with the director," Fischer explained.

At Visa's event, participants were able to hear from GSA and Social Security Administration officials about best practices for managing the card programs. Visa officials also familiarized managers with product features available to help with program oversight.

"In all the GAO audits there is one common theme: agencies have not taken advantage of the inherent internal controls of these card programs," said Bruce Sullivan, a vice president of government services at Visa USA.

"You can establish a single purchase limit, a monthly limit, a quarterly limit, and block certain merchants," said Sullivan, who is a former director of the Defense Department's purchase card program. "You have a lot of opportunities to really control these cards; it becomes an administrative challenge to do it. Some [agencies] managed that risk, and some didn't, and what the GAO was saying is that the controls could have been tighter."

Now, the Defense Department can garnish the salaries of employees with accounts 120 days or more past due and charge a $29 late fee when a bill is 75 days due and every 30 days after then until the bill is brought up to date.

Both Visa and MasterCard have data-mining software agencies can use to get a better sense of how and when cards are being misused.

According to Eva Robinson, vice president of public sector payment solutions for MasterCard, the software can be used to hone in on transactions, as well as split purchases.

"One of the things that surfaced from the GAO audits is that there were some instances where employees were splitting transactions to circumvent the [credit limit], so this software can verify that the cards can't be used at the same merchant within the same 24 hour period," said Robinson, who is a former director of contract policy for the Navy supply systems command.

During the past year the Office of Management and Budget has pressed agencies to clean up purchase and travel card programs, directing agency officials to develop plans for reducing fraud, waste and abuse in the programs and setting limits on the number of cards issued to employees.