Conned Gift Cards
The latest T&E scam and how not to fall prey to it.July 7, 2011
by Mary Schaeffer
Who would have ever thought that restaurant gift cards could cause trouble for companies. As retail businesses continue to find new ways to pry money from consumers’ wallets, a few professionals are using this same approach to get money to which they are not entitled from their employers. As you may have noticed, some restaurants sell pre-paid cards that can be used as gifts or for personal use. They are especially popular during the holidays. Unfortunately, some crooked employees have figured out a scam to obtain these cards at their employers’ expense.
The Fraud in Action. An employee takes a client out for a meal and when paying the bill tells the restaurant waiter to add in a $25 or a $50 gift card. Instead of the card being given to the client, the employee keeps it for personal use.
The scheming employee submits the credit card receipt for the entire amount including the gift card purchase, but uses the gift card for personal outings. Does any company’s Travel & Entertainment (T&E) policy permit this? I doubt it. But finding this type of fraud is not so easy.
What You Can Do
A detailed written T&E policy is your first defense against any type of misinterpretation.
The next step is to include a statement about a Policy of Zero Tolerance at the beginning of the T&E written policy. Make it crystal clear that your organization will not tolerate even the smallest fraud, whether it is related to travel or any other facet of corporate life. While harsh, it should also state that fraud will result in immediate dismissal. This stance needs to be made across the board because if certain behavior is tolerated in one group (e.g. sales) and not in another (e.g. accounting), a discriminatory situation can ensue.
Finally, consider requiring a detailed meal bill showing exactly what was ordered. Some organizations already require this to verify the number of persons attending. Other organizations, such as nonprofits or those that depend on grants, have strict no-liquor policies and use these receipts to verify and ensure that the organization does not inadvertently pay for liquor. Then spot check these detailed receipts. Select a certain number randomly and always include those employees who are known to push the reimbursement envelope.
ConclusionAlthough many organizations are reluctant to publicize the firing of an employee for cause, doing so will serve as a deterrent to anyone who is tempted to add a gift card onto their business meal bills.
Mary S. Schaeffer is the author of Controller&CFO’s Guide to Accounts Payable and Fraud in Accounts Payable: How to Prevent It. She publishes CFO & Controllers Accounts Payable Management Journal, writes a monthly newsletter, the weekly e-AP News and speaks at webinars and conferences.