Don’t fall prey to fuel fraud.

If you’re managing a fleet of company vehicles, one of the risks your bottom line faces is employee fuel fraud. A recent survey found that as much as 5% of a transportation company’s total annual fuel spend might be wasted on fuel fraud.  

In this article, we take a look at fuel fraud, why it happens, and what your business can do to protect itself. 

What is fuel fraud? 

This type of fraud refers to dishonest practices by employees, such as drivers, who are responsible for refuelling company vehicles. Or, it refers to the targeting of said employees by criminals intending to use their corporate fuel card information. 

This happens in two main ways: 

  • Misuse of company fuel cards – in which employees utilize company-issued fuel cards for personal use. 
  • Falsified fuel expenses – in which employees submit false or inflated fuel expense reports to obtain reimbursement for fuel that was never purchased or was used for personal purposes. 

It can be advanced or rudimentary theft. On the simpler end, you have drivers filling up some personal jerry cans while refueling the company truck; these instances can be dealt with individually and may not have much of a long-term impact. On the more technologically sophisticated end, organized criminals may target your drivers and use card-skimming to replicate fuel card data, then use those cards to finance other purchases. 

What are the consequences of employee fuel fraud?  

This trend of fraudulent activity within your fleet can have significant consequences, impacting various aspects of your operations, finances, and reputation.  

The financial losses are the most obvious consequence. A potential 5% of your fuel budget every year is no small hit, especially considering fuel can account for as much as 60% of a fleet’s operational budget. This could lead to an increase in your operational expenses overall, meaning other opportunities for research and development are missed, potentially giving you a disadvantage compared to your competitors. 

Misuse of fuel resources can also lead to inefficiencies. When fuel is used for unauthorized purposes or in excess, it reduces the availability of resources for legitimate business activities, potentially leading to delays, disruptions, or increased downtime. This can all have an impact on your business and your customers’ perceptions of you.  

All in all, employee fuel fraud can have very serious ramifications for your business. 

So how do you prevent it? 

The best thing you can do is implement robust controls, monitoring systems, and preventive measures to detect and deter fuel fraud. This can include: 

  • Enforcing strict fuel usage policies. 
  • Conducting regular audits and inspections. 
  • Investing in fuel management technologies. 
  • Taking disciplinary actions against offenders. 
  • Training employees on ethical conduct and fraud prevention. 

The same survey that found that 5% of a transportation company’s total annual fuel spend goes towards fraud also found that “most fleets use disparate systems to track fuel spend and other operating metrics, including fuel consumption.”  Whether the source of fraud is employees or criminals, if your monitoring methods don’t catch it right away, you’ll lose more money.  

In conclusion… 

Fuel fraud is one of the biggest issues impacting organizations with fleets right now. As tactics become more advanced, ensuring you have the proper monitoring technology is necessary to protect your money, your operations, and your reputation.