Lesson 7: Misuse/Abuse and Fraud

What ethical standards apply to purchase card/account holders?

Executive branch card/account holders are subject to the Standards of Official Conduct. These standards require that:

• Public service is a trust, requiring card/account holders to place loyalty to the Constitution, the laws and ethical principles above private gain.
• Card/account holders shall not use public office for private gain.
• Card/account holders shall satisfy in good faith their obligations as citizens, including all just financial obligations, especially those such as federal, state and local taxes, that are imposed by law.

What are some examples of misuse/abuse?

Misuse/abuse of the GSA SmartPay® Purchase card/account can take many different forms, but here are some of the most common examples:

Purchases Exceeding Authorized Limit

Card/account holders may be limited to and may not exceed a specific spending limit per transaction, per day or per monthly billing cycle.

No Available Funding

Federal law requires that funds must be available before any government purchase is made. It is up to the card/account holder to ensure that the funds are available prior to making any transaction.

Allowing Others to Use Card/Account

Card/account holders must take steps to ensure the security of their account. This means the purchase card/account must be used only by the card/account holder and only for official government business. If the card/account holder allows others to use the purchase card/account, the card/account holder will be held personally liable to the government for any unauthorized transactions.

Split Transactions

The Federal Acquisition Regulations (FAR) limits the dollar threshold for micro-purchases. Any purchase that, as a whole, would exceed the micro-purchase limit but is separated into smaller transactions in order to avoid the micro-purchase limit is considered to be a split transaction and is not allowable.

Products/Services Do Not Meet Requirements

Card/account holders must use discretion when making purchases to ensure that they meet the government’s requirements. Due to the wide array of products and services available, there may be occasions when card/account holders may be requested or tempted to buy luxury or deluxe versions of products and services that exceed the government’s actual requirements. For instance, it would be questionable for a card/account holder to buy a $500 designer fountain pen when there are many quality fountain pens available for $50 or less.

Purchases for Personal Consumption

All purchases must be for official government use only. Thus, any purchase made that is for the card/account holder’s personal use rather than for official government purposes is considered to be misuse. For example, a card/account holder who uses the purchase card/account to buy himself lunch because he had no cash available that day is misusing the purchase card/account.

Unauthorized Purchases

Purchases must be authorized by the agency/organization. Your agency/organization may have additional limits on the use of the purchase card/account, such as limiting certain categories or types of products or services.

What are some consequences of misuse/abuse?

Consequences for misuse/abuse may include:

• Reprimand.
• Purchase card/account cancellation.
• Counseling.
• Suspension of employment.
• Termination of employment.
• Criminal prosecution.

Please note that some agencies have agency-specific penalties and consequences for misuse/abuse of the purchase card/account.

What should I do if I suspect misuse/abuse?

A key responsibility for most A/OPCs is to detect and report suspected misuse. If you are required to report suspected misuse, make sure you have all the information necessary to assist with a formal inquiry or investigation. Contact the card/account holder to obtain any information that could explain questionable charges. If the card/account holder provides documentation or an explanation regarding the charges and you still have questions or concerns about it, compile all the information (such as a statement, exception report, documented contacts between you and the card/account holder, copies of receipts, etc.) before you report it.

Your agency/organization may ask you to report suspected misuse or fraud to one or more of the following personnel:

• The card/account holder’s supervisor.
• The Human Resources Office.
• The Approving Official.
• The Finance Officer.
• The Office of Inspector General or the Office of Special Investigations.

Always follow your agency’s policies and procedures when handling cases of suspected misuse.

Under the United States Code Title 18 Section 287, misuse of the purchase card/account could result in fines or imprisonment or both. Military members who misuse the purchase card/account may be subject to court martial under United States Code Title 10 Section 932 - Art 132.

What is fraud?

Fraud is a deception deliberately practiced with the motive of securing unfair or unlawful gain. Fraud can be an attempt to cheat the federal government and corrupt its agents by using GSA SmartPay payment solutions for transactions that are not part of official government business. Like any deception, fraud has its fair share of victims.

Some of the different types of fraud include:

Skimming

Occurs when a card/account holder’s data is stolen at the fuel pump, ATM or point-of-sale (POS) terminal.

Counterfeit Cards

Criminals make fake cards by using the newest technology to “skim” information contained on the magnetic stripes of cards.

Lost or Stolen Cards/Accounts

Often physical cards are stolen from a workplace, gym or unattended vehicle.

Card-Not-Present (CNP) Fraud

Internet fraud occurs whenever card/account information is stolen and used to make online purchases. Usually, a merchant will ask for the Card Verification Code (CVC) (located on the back of the card itself) to help prevent this type of fraud.

Phishing

Occurs whenever a card/account holder receives a fake email directing him or her to enter sensitive personal information on a phony website. The false website enables the criminal to steal information from the card/account holder.

Non-Receipt Fraud

Occurs whenever new or replacement cards are mailed and then stolen while in transit.

Identity Theft Fraud

Whenever a criminal applies for a card/account using another person’s identity and information.

What should you inform your card/account holders about fraud?

Card/account holders should be on alert to the indicators of fraud (including false charges/transactions, mischarging, bribes, gratuities and kickbacks). They should also make sure to report suspected fraud immediately through the proper channels at your agency (AO, A/OPC, Finance Officer, Office of the Inspector General or Office of Special Investigations, etc.).

Furthermore, card/account holders should understand that any intentional use of the GSA SmartPay Purchase card/account for other than official government business is considered an attempt to commit fraud against the U.S. Government and may be cause for disciplinary actions.

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