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November 12-14, 2018 | Las Vegas
COMMERCIAL CARD FRAUD PREVENTION & DETECTION
HEATHER MILLER, CPCP, MBACOMMUNITY ENGAGEMENT MANAGER, NAPCP
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November 12-14, 2018 | Las Vegas
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Learning Objectives
November 12-14, 2018 | Las Vegas
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
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Learning Objectives
November 12-14, 2018 | Las Vegas
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
Slide 5November 12-14, 2018 | Las Vegas
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
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About NAPCP
November 12-14, 2018 | Las Vegas
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
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About NAPCP
November 12-14, 2018 | Las Vegas
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!
-Global-Government/K-12-Corporate-Higher Education-Travel
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NAPCP Power Tools of Membership
November 12-14, 2018 | Las Vegas
•Resource Center
•Newsletter
•Share SamplesContent
•eNetworking
•Member Directory
•User GroupsNetworking
•Events
•Regional Forum, Conference, Webinar
•CPCP ExamDiscounts
PROPRIETARY AND CONFIDENTIAL PAGE 9Slide 9
About NAPCP
November 12-14, 2018 | Las Vegas
• 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
PROPRIETARY AND CONFIDENTIAL PAGE 10Slide 10
NAPCP Commercial Card and Payment Conference
November 12-14, 2018 | Las Vegas
• Celebrating our 20th Anniversary
• Over 600 attendees
• 3 ½ days of pre-conference workshops, education, exhibits, networking, and fun
PROPRIETARY AND CONFIDENTIAL PAGE 11Slide 11
Defining Fraud & Misuse
November 12-14, 2018 | Las Vegas
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
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Designing Your Program
November 12-14, 2018 | Las Vegas
• 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
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Fraud Prevention and Detection
November 12-14, 2018 | Las Vegas
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
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Fraud Prevention Tactics
November 12-14, 2018 | Las Vegas
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
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Fraud Prevention Tactics
November 12-14, 2018 | Las Vegas
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
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Fraud Detectives
November 12-14, 2018 | Las Vegas
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
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Transaction Audits – P-Card
November 12-14, 2018 | Las Vegas
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
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Transaction Audits – Travel Card
November 12-14, 2018 | Las Vegas
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
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Fraud Detectives
November 12-14, 2018 | Las Vegas
Additional Areas for Audit
• Approvals
• Documentation
• Expense control
• Reviewing, Reconciling and Approving
• Audit timeline
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Report Audits
November 12-14, 2018 | Las Vegas
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
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Contact Information (include Name, Email, Phone)
November 12-14, 2018 | Las Vegas
Questions and Follow-Up:
Heather MillerCommunity Engagement [email protected] x9