Company credit card fraud: How to respond and recover

by Faustine Rohr-Lacoste | April 02, 2019

For modern businesses, relying on a company credit card for day-to-day expenses makes sense - at least in the short term. You want to enable your staff to get out and do their thing, and the company plastic is a simple way to let them get the job done.

For most companies, this is option number one.

But as with so many things in the business world, the first thought is not always the best thought. Despite their continued popularity, standard-issue company cards carry a higher risk of fraud and misuse than other options.

But what choice do you have?

Actually, you do have options that give companies control and security in managing their expenses, all while maintaining convenience and flexibility for staff. This means less stress around the details, and greater consistency and clarity in managing company expenses.

But first, the current state of play.

Company credit cards - standard issue dinosaur

dinosaur-credit-card-fraud

Standard-issue company credit cards have long been a favourite of new businesses. After all, they’re simple to obtain, relatively straightforward to use, and are a known quantity. Most banks offer a credit card facility as part of their standard business packages, with the end result being a mountain of company plastic floating around out there.

However, despite their ongoing popularity, the use of company credit cards involves juggling some significant security challenges:

  • High trust: Giving your staff access to a company credit card means letting it out of your personal control. You may have all the faith in the world in your team, but as the common instances of company credit card fraud suggest, the temptation to misuse the company plastic is ever-present.
  • Delayed oversight: For many company credit cards, detailed billing particulars are provided only at the end of each month. This can make it a challenge to keep an eye on expense payments as they arise, and can result in nasty surprises down the track.
  • Risk of loss: Company credit cards can easily be misplaced or lost. At a minimum, this can result in a disruption to company purchases. At worst, it can result in intentional fraudulent misuse by an outside party.
  • Credit card fraud: Company credit cards carry a higher risk of fraud and misuse than alternative expense payment options, such as preloaded debit cards.

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Responding to credit card fraud - what should you do?

Despite the best of intentions, credit card fraud can and does occur everyday. In the year leading up to November 2017 alone, fraudsters in the United Kingdom were responsible for over £1 billion in fraudulent credit card spending.

To choose an option for managing expense payments, companies must consider the ongoing risk of credit card fraud or misuse. At a minimum, you should ensure every member of your team is aware of the risk of fraud, and can take the necessary steps to prevent it.

If you suspect your company credit card has been misused, consider the following steps:

First, cancel the card

Contact your bank as soon as possible, and be ready with the necessary particulars concerning your account. It pays not to delay here - the longer the card remains valid, the longer your company may be exposed to fraudulent spending.

Your bank may offer credit card fraud insurance cover, but will expect you to provide prompt notification concerning the suspected fraud.

Identify the fraudulent party

If you yourself made online purchases using the credit card, it may not be an option for you to identify the fraudulent party right away. If you’ve shared the card around the office, it’s possible one of your team may be responsible for the breach. In this case, you’ll need to do what you can to establish who is responsible.

Management and human resources can then consider the relevant disciplinary steps.

Check other company accounts for signs of potential fraud

It may be the case that the fraudulent spending was limited to a single credit card, and - hopefully - a contained number of transactions. However, one instance of credit card fraud could be a sign of other fraudulent activities taking place elsewhere.

Be on the safe side, and be sure to check other company accounts for any signs of irregular or unauthorised spending.

Contact your insurer

This depends on the nature of your insurance, and whether or not you have cover for credit card fraud. If you do, your insurance company will advise you on the process for making a claim, including the documentation required, the amount able to be recovered, and the timeline for payment.

Payouts for credit card fraud may also affect your company’s future insurance premiums.

Consider making a report to the police

Depending on the situation, you may be tempted to handle your company’s response internally, without contacting the authorities. However, involving law enforcement is a key step in maintaining accountability and culpability for fraudulent activities, and helps to prevent such activity from occurring again in the future.

In addition, your insurer will likely require a police report to be filed before processing any claim.

Getting back to normal after company credit card fraud

Getting back on track following credit card fraud can be tricky. Depending on the particular circumstances, your company's credit facility will likely need to be suspended pending the issue of a new card or cards.

This can involve significant delays, as well as disrupting bill payments and automated expenses. In the meantime, your team may need an alternative way to cover work expenses, such as paying from their own funds and being reimbursed. This can be a pain.

In most cases, you’ll need to re-establish automated payments and provide the details of any new credit cards to the previous payees. Unfortunately, this can take a lot of time, and can be a major distraction from the core needs and demands of your business.

Expense management systems - security and convenience

Given the limitations and risks associated with standard-issue company credit cards, it’s no surprise that many companies are turning to more secure options for managing company expenses.

The advent of integrated expense management systems helps companies to handle their expenses in a safe and convenient way, minimising the risk of fraud and misuse.

Spendesk achieves this through the following features:

  • Pre-loaded debit cards: An alternative to credit cards, debit cards allow staff to spend pre-authorised funds on specifically approved classes of expense, (for example, travel, accommodation or catering). This reduces the potential misuse of funds, and gives staff members clarity and consistency regarding their expenses.
  • Real-time payment validation: With company credit cards, anyone with the card can charge nearly any expense at any time, without needing the approval of management or finance. An expense management system enables your team to request same-time validation from management for specific charges, meaning quick and easy transactions and no surprises at the end of the month.
  • Single-issue virtual credit cards: An expense management system allows staff to generate virtual credit cards, producing a single-issue credit card number for use only in paying a specified expense. This effectively reduces the risk of credit card fraud to zero, as the credit card number cannot be used for any purchase other than the one approved.
  • Detailed oversight of company expenses: The same-time processing of expenses against specific expense categories gives a comprehensive and detailed picture of company expenses at any point in the month, including total balances per staff member and per expense category. This level of detail helps with the early detection of potential expense report fraud, and helps you stay in control of company funds.

These features work together to enable you to identify potential fraud or spending irregularities as early as possible, helping you to respond proactively and protect your business.

Faster recovery, less risk of disruption

When it comes to credit card fraud, prevention is everything. However, when the dust has settled and an incident of fraud or misuse has been resolved, you’ll want to get back to normal as soon as possible.

An integrated expense management system such as Spendesk can help. With Spendesk, automated payment details are stored independently of any particular card or line of credit, meaning there is no need to contact individual payees following an incident of fraud or misuse.

What’s more, you can be sure no automated payments will be missed, as ongoing payments can still be processed even in the event of cancelling or reissuing a particular card. This gives you one less thing to worry about.

Lower your risk of exposure

Startups and established companies are increasingly ditching the standard company credit card in favour of dedicated expense management systems.

It's clear to see why. With integrated tools such as Spendesk, companies benefit from the added security of same-time expense validation, single-use virtual credit cards, and prepaid debit cards for individual staff members broken down into specific classes of expense.

These features work together to reduce the risk of credit card or expense fraud, providing flexibility and convenience for your team while maintaining the security and integrity of your company’s finances.

What’s more, in instances of suspected fraud or mismanagement, Spendesk makes it easier to recover, minimising the disruption to your day-to-day business.

Lower your risk of exposure - consider switching from the standard-issue company credit cards to Spendesk. You can rest easy knowing you’re better equipped to prevent credit card fraud, and able to bounce back quickly and easily should the worst happen.

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TOPICS : For founders For CFOs Fraud & security

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