Fraud Prevention for A/OPCs

Fraud Definition and Types

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

GSA is posting this information to help you, your agency, and the Federal Government avoid being victimized. Fraud can come in many disguises, such as false emails, mail, or phone calls. Likewise, intentional misuse of a GSA SmartPay payment solution by the account holder can result in fraud. In addition, non-account holder fraud involves the use of the payment solution or account holder information by an unauthorized person.

As a GSA SmartPay cardholder, you should be aware and take necessary steps to protect your account and yourself.

Different Types of Fraud

Some of the different types of fraud include:

Counterfeit Accounts — To make fake cards, criminals use the newest technology to “skim” information contained on magnetic stripes of cards, and also to pass security features (such as holograms).
Lost or Stolen Accounts — Often physical cards are stolen from a workplace, gym or unattended vehicle.
Card Not Present (CNP) Fraud — Internet fraud occurs whenever account information is stolen and used to make online purchases. Usually, a merchant will ask for the CVC code (located on the back of the card itself) to help prevent this type of fraud.
Phishing — Phishing occurs whenever an 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 account holder.
Non-Receipt Fraud — This occurs whenever new or replacement cards are mailed and then stolen while in transit.
Identity Theft Fraud — Whenever a criminal applies for an account using another person’s identity and information

Detecting Fraud

One of the first signs that you have been a victim of fraud will be at least one “mystery expense” showing up in your monthly statement. To help detect fraud, you should verify your statement by:

Looking for transactions you do not recall making;
Checking for unknown vendors; and,
Searching for account withdrawals you do not remember making.

Avoiding internal/external Fraud

Some tips to avoiding fraud are:

Secure account numbers and information.
Safeguard your personal identification number (PIN). Do not write it down — memorize it. Do NOT share your PIN.
Monitor your card during transactions. When the card is returned, check to make sure it is indeed yours.
Make a list of account numbers with key contact information, in case you need to report a lost or stolen account.
Immediately report lost/stolen accounts and/or any questionable charges.
Sign the back of a new card as soon as you receive it. If you do not receive a replacement card before the expiration date of the older card, contact the bank.
Destroy unwanted or expired cards and shred (or secure) monthly statements and receipts.
Always verify charges appearing on your monthly statement. Note that online statements provide a faster, more efficient way to check for fraudulent activities.
Unless you initiated the purchase, NEVER give your account information over the telephone, through the mail, or on the Internet.
Consistently check your account for accuracy of personal and billing information. Notify the bank if your personal information and/or address needs updated.
Never let a telemarketer or salesperson pressure you into agreeing to a deal.
Be aware of common scams. If you are unsure of a situation, please contact your A/OPC or the bank.
Examine your credit report at least once a year.
Update the anti-spyware and anti-virus software on your computer.

Understanding Account Holder Misuse and Fraud

Fraud can be defined as a deception deliberately practiced with the motive of securing unfair or unlawful gain. Specific to our topic here, fraud can be an attempt to cheat the Federal Government and corrupt its agents by using GSA SmartPay accounts for transactions not part of official government business. Fraud can come in many disguises, such as false emails, mail, or phone calls. Likewise, intentional misuse of a GSA SmartPay account by the account holder can result in fraud. The employing agency of an account holder who misuses the account or who participates in fraud may cancel the purchase account and take appropriate disciplinary action against the employee. In the case of account misuse, the employee will be held personally liable to the Federal Government for the amount of any unauthorized transaction.

Depending on the facts involved, an employee may be subject to fine or imprisonment for action relating to purchase account misuse and fraud. Employees issued an account have a responsibility to use the account to procure supplies and services at the direction of the agency under official purchase authorization. Examples of misuse include:

Purchases that exceed the account holder’s limit,
Purchases not authorized by the agency,
Purchases for which no funding exists,
Purchases for personal consumption,
Purchases that do not comply with the FAR and/or other applicable procurement statutes and regulations, and
Purchases billed by the merchant but not received by the agency.

There are guidelines and procedures for disciplinary action to be taken against individuals for the improper, fraudulent, or abusive use of the purchase account. Purchase account misuse/ fraud may have the following potential consequences:

Counseling,
Cancellation of purchase account,
Notation in employee performance evaluation,
Reprimand,
Suspension of employment,
Termination of employment, or
Criminal prosecution.

Understanding Non-Account Holder Fraud

Non-account holder fraud involves the use of the purchase account or account holder data by an unauthorized person. Non-account holder fraud is investigated by special units within the banks. Any information acquired that relates to non-account holder fraud should be reported. The risk of non-account holder fraud is higher in certain situations including:

Account/Card never received – A new or replacement card has been mailed to the account holder but was not received. This may be due to a third party interception. In this case, the account should be cancelled and new card issued.
Lost or Stolen Account/Card – If the account holder reports the account as lost or stolen, the account will be cancelled and new one issued. Reporting the account as lost or stolen does not relieve the Federal Government for payment for any transactions that were made by the account holder prior to losing it. If transactions not made by the account holder appear on the statement, the account holder has 90 days from the date of the transaction to file a dispute. If it is not done within 90 days, they may forfeit their rights to dispute.
Altered or counterfeit cards – This occurs when third parties obtain account information and used that information to make purchases with an altered or counterfeit card. If the banks recognize a fraudulent pattern of use at the time of authorization, the bank will validate the use of the account with the account holder and/or suspend the account. If transactions not made by the account holder appear on the statement, the account holder has 90 days from the date of the transaction to file a dispute. If it is not done within 90 days, they may forfeit their rights to dispute.
Account takeover/ Identity theft – In this case, the account holder’s identity has been compromised and a third party has requested a new account by providing confidential information about the account holder. Any account holder who believes that he or she may have been subject to identity theft should contact the bank’s customer-service department. Once a determination is made that an account has been compromised, investigation is the responsibility of the bank. Unless a government employee is determined to be involved in the fraud, the agency generally does not participate in the investigation. The account will be closed, and a replacement account opened.

Misuse and Abuse

Intentional use of a government account for other than official government business constitutes misuse, and depending on the situation, may constitute fraud. Each agency develops and implements policies related to employee misuse. Examples of misuse include:

Purchases that exceed the account holder's limit;
Purchases that are not authorized by the agency;
Purchases for which there is no funding;
Purchases for personal consumption, and
Purchases that do not comply with the policies that govern each particular payment solution type.

Potential consequences for the account holder may include: counseling, cancellation of the card, a written warning, notation in employee performance evaluation, reprimand, and/or suspension or termination of employment.

In the case of a centrally billed account (CBA), either purchase or CBA travel account misuse, the employee may be held personally liable to the Federal Government for the amount of any unauthorized transactions. Depending on the agency and the circumstances, there are a number of applicable laws that can result in fines or imprisonment.

Additionally, in certain cases, vendors are authorized to take certain actions against account holders whose accounts are cancelled for delinquency, such as:

Assessing late fees;
Utilizing collection agencies to recover the delinquent balance;
Reporting the delinquency to national credit bureaus, and
Salary offset.

Understanding Account Holder Misuse and Fraud

Purchases that exceed the account holder’s limit,
Purchases not authorized by the agency,
Purchases for which no funding exists,
Purchases for personal consumption,
Purchases that do not comply with the FAR and/or other applicable procurement statutes and regulations, and
Purchases billed by the merchant but not received by the agency.

Counseling,
Cancellation of purchase account,
Notation in employee performance evaluation,
Reprimand,
Suspension of employment,
Termination of employment, or
Criminal prosecution.

If I become a Victim of Fraud

If you discover that someone else has used your account, promptly report the incident to your A/OPC and the bank’s customer service representative. Once your account (or the account holder information) has been reported lost or stolen, the account is immediately blocked. If necessary, the bank will then issue a new card with a new account number. Also, your bank will send you a letter explaining the steps you can take to protect yourself further. Sometimes, unauthorized transactions will appear on the billing statement, even though the account was reported lost or stolen. You should report all unauthorized transactions by calling the bank's customer service telephone number.

If your GSA SmartPay account falls victim to fraud, contact your A/OPC and your agency’s bank immediately.

U.S. Bank
fraud_help@usbank.com
(877) 595-6256

J.P. Morgan
abuse@chase.com
(888) 297-0781

Citibank
emailsproof@citigroup.com
(800) 274-6660

If Fraud has already occurred

If an account holder reports fraud, it is your responsibility to contact the issuing bank for further investigation. The bank will block/cancel the account and replace it immediately. If you suspect an account holder is guilty of fraud, you can file a complaint with your agency’s Inspector General. Investigations are initiated upon receipt of a complaint or other information that gives a reasonable account of the wrongful or fraudulent act. Many agencies provide fraud hotline numbers to report fraud. Be as specific as possible when calling or sending a complaint. The following should be provided:

The employee's full name
Rank or pay grade
Duty station
Specific suspected fraudulent act or wrong doing
Specific dates and times
Specific location of where the suspected fraudulent act occurred
How the individual completed the alleged fraudulent act

Based on the findings of the investigation, you may be required to notify an employee’s supervisor and human resources office for further internal administrative action. Depending on the action you may also need to contact other organizations including:

The bank’s fraud unit
The Inspector General
The Fraud Hotline
The DOD Criminal Investigative Service (DCIS)
The Federal Bureau of Investigation (FBI)
The Naval Criminal Investigation Service (NCIS)
The U.S. Army Criminal Investigation Service (USACIDC)
The Air Force Office of Special Investigators (AFOSI)

Reporting/Monitoring Fraud

Program Coordinators should use electronic reports to monitor and track misuse and fraud. The following reports may be utilized to detect misuse and fraud within your program:

Account Activity Report –This report shows all active accounts and spending for each account during a billing cycle. It provides details on each transaction, including transaction date, transaction type, merchant name, and dollar amount. It is particularly useful for identifying suspicious merchants, unusually high spending patterns, excessive convenience check usage, and untimely purchases.
Declined Authorizations Report – The declined authorization report will identify account holders who have attempted to use an account to buy an item for which they are not authorized, that exceeds their single-purchase limits, that exceeds their monthly purchase limit, or from a merchant that falls under a blocked Merchant Category Code (MCC).
Disputes Report – The disputes report identifies date, merchant, reason code, dollar amount, and status of each dispute filed by an account holder. Approving officials and A/OPC’s should track and follow up on disputes to determine their outcomes. Account holders should attempt to resolve disputes directly with merchants prior to filing a disputes report. If a merchant is consistently appearing on the disputes report, the A/OPC should determine whether the merchant may have billing issues, quality issues, or is attempting to commit fraud by submitting false transactions.
Unusual Spending Activity Report – The banks offer various reports identifying transactions that may warrant further review.
Lost/Stolen Account Report –The lost/stolen account report identifies accounts that are reported lost or stolen. This may either be an indicator that the account holder needs to secure his/her account or that the account holder is attempting to disguise misuse or fraudulent activity by denying the charges.
Master File – The master file should be reviewed periodically to eliminate account holders who are no longer employed in the agency, correct addresses, and verify whether card limits and authorization controls are appropriate.
Ad Hoc Reports - Your bank may offer an ad hoc reporting tool that enables you to create customized reports with the data elements you specify.

Taking Action

Potential consequences for the account holder may include:

Counseling,
Cancellation of the account,
A written warning,
Notation in employee performance evaluation,
Reprimand, and/or
Suspension or termination of employment.

In the case of purchase account, the employee may be held personally liable to the Federal Government for the amount of any unauthorized transactions. Depending on the agency and the circumstances, there are a number of applicable laws that can result in fines or imprisonment.

Additionally, in certain cases, the issuing banks are authorized to take certain actions against account holders whose accounts are cancelled for delinquency, such as:

Assessing late fees;
Utilizing collection agencies to recover the delinquent balance;
Reporting the delinquency to national credit bureaus; and
Salary offset.