Managing fuel costs can be a complex process, especially when taking into consideration the risk and consequences of fuel fraud…
Unfortunately, fuel fraud is a fact of life for most fleets – and one that’s costly – so it’s vital that you have the means to know the telltale signs for spotting it. For example, you should ask yourself:
Do mileage figures provided by the driver correlate with odometer readings?
Does the volume of fuel listed on a receipt exceed the vehicles’ maximum fuel tank capacity?
Has the driver purchased the correct type of fuel?
Is the vehicle’s MPG reading unusually low?
If the answers to the above questions reveal discrepancies and the numbers don’t quite add up, you may be a victim of fuel fraud.
Fuel fraud presents itself in many different shapes and sizes so, in order to prevent it from happening in your business, it’s important to understand the different types and how they occur:
One of the most common forms of fuel fraud when employees are reimbursed, this refers to inflating mileage figures when personal vehicles are used for business purposes.
This can include numerous fraudulent actions such as filling non-approved vehicles; claiming a fuel purchase that exceeds a vehicle’s fuel tank capacity, and ‘side fueling’ when the driver pumps fuel into a container for personal use, but still charges the business.
Fuel Card Fraud
An increasingly common form of fraud, this refers to inflating fuel card transactions by sharing fuel cards and authorizing multiple pump purchases.
Fuel Type Fraud
This simply means purchasing the wrong type of fuel, which indicates that the purchase has been made for an unauthorized vehicle.
This occurs when fuel is removed from the tank of a vehicle for personal use. On occasion, the driver will also refuel his or her authorized vehicle.
As you can see, there are many different variations of fuel fraud. According to a ‘Fraud Matters’ study conducted by Shell, as many as 93% of fleet managers believe that some drivers are involved in fraudulent activity, and more than a quarter of drivers have admitted to witnessing deceitful activity at work.
PREVENTION – IS IT POSSIBLE?
Put simply, yes. There are numerous ways to crack down on fuel fraud, however, some methods can be time-consuming if relying on manual processes, and your company may still be vulnerable.
Some of the preventive actions you can take include:
Allocating Fuel Cards and PINs
Allocating fuel cards gives you more control over the purchasing of fuel but it’s also worth prompting drivers to enter a Personal Identification Number when using them. PINs make it more difficult for drivers to swap fuel cards, and easier to perform regular fraud checks using fleet management software.
Implementing Fuel Limits
Many fuel cards have the option of setting purchase limits, so drivers can only buy a certain amount of fuel at one time.
Is a driver stopping multiple times on any one route or day, unnecessarily, and in effect fueling more than one vehicle? Frequent checks of fuel stops will uncover this type of activity.
Conducting Manual Cross-checks
It’s important to crosscheck all fuel purchase receipts with a fine tooth-comb to make sure that drivers are providing you with the ‘full picture’.
Ultimately, you should make the consequences of fraudulent actions clear to your drivers. Fuel fraud is a criminal offense, but some drivers may not understand just how serious it is.
Fleet managers can struggle to tackle fuel fraud. Without implementing good security and comprehensive reporting systems– as error-prone paper processes do not allow for tight data controls – drivers may forget, have bad writing or simply lie about the mileage driven on behalf of the company.
The use of fleet management software can help to automate the reporting and analysis of fuel purchasing, at the same time highlighting fueling discrepancies and eliminating error-prone, time-consuming administrative tasks.
Having a comprehensive overview of your fleet’s fuel usage will help to eliminate as many fraud variables as possible and making use of advanced software with data management and analytic capabilities will help to control costs and eliminate fuel fraud.
A survey conducted by Shell revealed that approximately 65% of company car fleet managers now see fuel related fraud as a major issue for their businesses, and nearly 48% think that more should be done to tackle the issue.
There are, however, a set of common barriers that prevent fleet managers from taking the necessary action. The study found that…
37% of fleet managers lacks awareness of what their drivers are doing
32% lack the time to invest in investigating fraudulent activity
30% lack financial and administrative resources to manage fuel purchasing
20% lack key data required to identify fuel fraud
19% don’t consider the threat to be serious
According to Shell, 48% of fleet managers think that improving practices to tackle fuel fraud could reduce fuel spend by 5% or more.
Here are two of the most common challenges you may face, and how fleet and asset management software can help to tackle the problem:
Fueling a non-fleet vehicle:
Fuel fraud can take the form of filling a non-fleet vehicle during an authorized transaction. It’s as simple as using the same pump to fill two vehicles on opposite sides of the fuel island.
To highlight any potential purchase discrepancies, fleet management software can alert you to this fraudulent practice by identifying an accurate mileage reading, the vehicle’s fuel tank size, average fuel economy and the amount of fuel purchased.
Inflating business mileage
Fuel fraud can involve inflating business trip mileage when a personal or mixed-use vehicle is in operation.
Fleet management software can be used to identify this fraudulent practice by comparing mileage – which drivers are required to record – with integrated telematics data that uses GPS to record time-and-date-stamped start-to-end locations for each trip.
TAKE AWAY FACTS
Fuel costs represent a large part of a fleet’s operating expenses and, only by ensuring your business has a place to record and audit both business and personal mileage, can those costs be kept in check and fraud eliminated.
The fact of the matter is, when it comes to combating fuel fraud, paper processes should not be used. Fleet management database systems with tools to report and analyze fuel usage and costs not only remove the administrative challenges of spreadsheets or paper, but can automate data collection and analysis for drivers and managers on things such as tank capacity over fueling, wrong fuel types, and more.
Other, semi-automated processes can be adopted too, however, great importance should be placed on educating your drivers about fuel fraud, allowing them to think smarter and act responsibly.