commercial card fraud prevention & detection · • losses to the card-using organization...

November 12-14, 2018 | Las Vegas

COMMERCIAL CARD FRAUD PREVENTION & DETECTION

HEATHER MILLER, CPCP, MBACOMMUNITY ENGAGEMENT MANAGER, NAPCP


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Learning Objectives


Taken from the headlines:

• ETHICS COMMISSION CLOSES CASE AGAINST MINNELOA COUNCILMAN

• CEO, CONTROLLER CHARGED WITH USING COMPANY FUNDS TO PAY $1M PERSONAL CREDIT CARD DEBT

• ACCOUNTING NORMS NOT FOLLOWED IN SCHOOL’S $25k GIFT CARD PURCHASE

• NEW ORLEANS CITY COUNCIL CREDIT CARD SPENDING MAY HAVE BROKEN LAW, AUDIT FINDS

• BUNCOMBE GOVERNMENT RESPONDS TO CORRUPTION INVESTIGATIONS WITH CHANGES

Learning Objectives


The reality:

• Losses to the card-using organization account for 0.016% of P-Card spending

• Equivalent of $160 of misuse for every $1 million of purchasing card spending

• Travel Cards pose lower risk than other payment methods:

• $20 of internal fraud per $1 million in Travel Card spend

• 86% believe risk associated with Travel Card is similar or less than other payment methods


Topics Include

• distinguishing between fraud and misuse

• integrating fraud deterrents in program design

• prevention and detection techniques

Objectives• integrate deterrents in program

design

• establish roles and responsibilities on program management team

• implement appropriate policies

• document clear procedures

• create and analyzing reports

• conduct a risk analysis

Real or perceived laxity of controls within a P-Card program can result in withdrawal of management support. This presentation is designed as a resource to help you minimize the potential for P Card fraud and misuse.

Learning Objectives

About NAPCP


We are an association committed to advancing YOU and Commercial Card and Payment professionals worldwide by providing continuing educational and peer networking through our conferences, Regional Forums, webinars, newsletters and community engagement.

Established in February 1999

Work with over 20,000 members and subscribers

More than 2,000 pages of industry updates, whitepapers, best practices, samples, tools and much more in our Resource Center

About NAPCP


Of more than 20,000 members and subscribers:

74% End Users

26% Providers

63% Corporate

21% Government/K-12

16% Higher Education

Join a User Group to stay connected or volunteer to create a new group of interest to you!

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•Resource Center

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https://www.napcp.org/page/JoinUserGroup

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PROPRIETARY AND CONFIDENTIAL PAGE 9Slide 9

About NAPCP


• Join the nearly 400 CPCP credentialed individuals from the industry. The CPCP:– Increases value to current employer and potential for promotion

– Represents expertise and provides a competitive advantage when job-seeking

– Offers personal pride and professional satisfaction

• 3 Testing Periods per year (April, June, October)

• 2 years experience + 15 points

• $295 member/$395 non-members

• www.napcp.org/CPCP

http://www.napcp.org/CPCP


NAPCP Commercial Card and Payment Conference


• Celebrating our 20th Anniversary

• Over 600 attendees

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Defining Fraud & Misuse


Fraud

• Unauthorized use of a card

• Inside or outside company

• Personal gain

• Merchant error

• Liability

– Circumstantial

Misuse

• Unauthorized activity on a card

• Non-compliance with policies

• Liability

– Company

Protect your program

against both with efficient

controls

Designing Your Program


• Unique card design to distinguish from personal credit cards

• Intentional card distribution

• Controls for regulating and monitoring purchases

• Strategies for testing effectiveness

• Requirements for documentation

• Detailed reporting

• Establishing proper roles and responsibilities

Fraud Prevention and Detection


Establishing roles and responsibilities

• Program Management

• Cardholders

• Approvers

• Card Issuer

• Supplier

Ensuring separation of duties

• Performs all steps of a process without oversight

• Extensive access to more than one system

Fraud Prevention Tactics


Implementing appropriate controls • Personal Use

• ATM Blocking

• Transaction Splitting

• Process for ongoing review and communication

Documenting clear procedures • Program Participants

• Acceptance of Procedures

• Program Management

Fraud Prevention Tactics


Control Description

Single TXN Limit Max dollar amount for single txn

Daily and/or Monthly Limit Max dollar amount per time frame

Velocity controls Limits number of times used in designated time frame

Merchant Category Code Restrictions Blocks card usage in prohibited industries

Storefront Merchant Blocking Blocks card usage by merchant

ATM Blocking Prevents cash withdrawls

Fraud Detectives


Process

• Completed by auditorsto test effectiveness of controls

• Are cardholders and card managers following processes?

• Interview and or test cases

Transaction

• Completed by card management to identify fraud, misuse, and policy compliance

• Completed in accordance with auditor procedure

• Cluster sample

Transaction Audits – P-Card


Transaction Audits • High-dollar transactions• Transactions with certain suppliers and/or MCCs• Transactions with certain “key words”• Transactions occurring during non-business hours• Certain expense types • High volume/activity P-Card users• New cardholders• Cardholders with a new manager/P-Card approver• Entire departments—by manager—on rotating basis

Transaction Audits – Travel Card


Transaction Audits • Class of flight

• Flight destination

• Air passenger

• Itemized hotel folio• Entertainment charged to room

• Advance travel booking / Pre-trip approval

• Meal thresholds / Per diem use

Fraud Detectives


Additional Areas for Audit

• Approvals

• Documentation

• Expense control

• Reviewing, Reconciling and Approving

• Audit timeline

Report Audits


Report Audits • Declined transactions• MCC Codes and Decline Date

• Activity analysis • MCC, Even dollar amounts

• Disputed charges

• Account listing • Last Used Date, Limit adjustment

• New account activity

Contact Information (include Name, Email, Phone)


Questions and Follow-Up:

Heather MillerCommunity Engagement [email protected] x9

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commercial card fraud prevention & detection · • losses to the card-using organization...

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