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Travel & Expense Purchase Card Artificial Intelligence

Beware of Double-Dippers: 9 Scams to Look Out for in T&E Fraud & Misuse

on April 11, 2018

Double dippers are everywhere. They lurk at your backyard barbecue and at your neighbor’s Super Bowl party. You know the type – like George Costanza in the classic Seinfeld episode who takes a bite of his chip and dips it a second time. Timmy accuses George, “You double-dipped the chip.... That’s like putting your whole mouth right in the dip! “

All I can say is, yuck! Besides being a nasty habit, double-dipping is also a health hazard. If you see someone do it, you might want to avoid that dip, seriously.

But there’s another kind of double-dipper you need to watch for at your company, too. Maybe it’s the person in the cubicle next to yours or the co-worker you chatted with in the breakroom this morning. These are the folks who expense something twice – like a meal or even airfare – doubling their reimbursement from the company.

Tweet This: Is George Costanza double-dipping in the cubicle next to you? Beware these 9 common T&E #expensereport scams: http://bit.ly/TE9dbldip #biztravel #fraud

While submitting duplicate expenses may not be a health hazard like double-dipping chips, it can do some serious damage to your travel and expense budget. It’s also called expense fraud and abuse. And like the double-dippers at the snack table, T&E double dippers often fly under the radar. Since most managers approve one expense report at a time, they’re unlikely to notice duplicates, especially if they pop up weeks later.  

I recently ran our automated risk management and continuous monitoring solution against one company’s data and found 2,038 duplicates totaling over $80,0000. Not small potatoes, this problem can quickly mushroom, siphoning off corporate spending.

These are some of the most common double-dipping frauds and when and where to look out for them.

1. Meal-o-mania. This is the easiest and most-common double-dipping fraud to get away with. It’s also the least likely to be questioned – because everybody’s got to eat. A busy manager is unlikely to ever notice the duplicate even submitted on the same expense report. We see duplicates where the charge was placed on the corporate card and the employee also submits the same meal as out of pocket spend. Just as common is two expense lines requesting cash back for the same meal on the same day. But an artificial intelligence-based risk management and monitoring solution will detect the duplicate – or close facsimile.

2. Hotel stays. It’s not uncommon to have one employee pay for the lodging of another, especially when one is the manager or the other doesn’t have a corporate card. However, not all same-day stay hotel bookings are so innocent. With new hotel apps that allow for remote check in, that additional hotel room may not be occupied. Where before the unauthorized room might be for bringing the family into town for a long weekend, now you should watch out for “mattress runs.” This is where the employee checks into the hotel remotely through a check-in app and then collects the extra stay nights for better rewards or elite travel status. The two different hotel stays are put on different expense reports to conceal the fraud, and the manager is none the wiser.

3. Two-timers. These folks are correctly using their corporate card for a valid business need. However, right after the charge, they submit an expense line for the value as an out-of-pocket charge as though they paid cash or used their personal credit card. Then, a few weeks or months later, they submit the same expense with the true card charge information. These double dippers don’t stick to small dollar charges, either: airline fares, catered events, and week-long car rentals are all fair game for duplication. A second type of two-timer is all about helping his friends. He scans his valid receipts and submits them with his expense report as expected. Yet, then he crosses the line by giving them to his BFF in the next cubicle to do the same. Problem is, the company pays twice and both employees are colluding together to cheat their employer.

4. Receipt deception. Receipts are usually required for most items to provide the details and additional information regarding the expense line. But the problem with receipts is the value they add can vary wildly based on what the employee submits. Not only can they can be altered using Photoshop software, but they can also be fake. If you’re relying on receipts as proof of a valid expense, then your financial controls may be weaker than you realize.

5. Treats. The life of the road warrior is far from glamorous. Away from home for days or weeks at a time, many road warriors begin to feel a little entitled to little treats and rewards for their sacrifice and hard work. They may start out as small petty thefts – such as expensing a lunch with a colleague or buying a scarf as a little “reward” for hard work. However, these can be gateway crimes to larger fraud schemes. It’s always best to stop the small stuff to prevent them from developing into bigger problems later.

6. Doubling up. Employees go on a business trip using their personal vehicle to get around. Then, they submit both the mileage expenses and gas charges – for the same trip. This is a clear violation of T&E policy. If you drive your personal vehicle, you get reimbursed for the miles driven, including all the cost of operating a vehicle such as maintenance, repairs, taxes, gas, insurance, and registration fees. If you rent a car, you only get reimbursed for the rental plus any fuel charges. It’s one or the other – not both.

7. Monthly recurring charges. Low-level fraudsters often slide in a duplicate of an extra recurring charge, such as cellphone charges. Employees tend to submit more than one month of expenses at a time, which makes it harder to spot the duplicate.

8. Back-to-school bonanza. In late summer, in the weeks before youngsters go back to school, that’s where we see a significant uptick in expenses for office supplies and snacks from office supply chains or even supermarkets. Employees may slide in a few valid office supplies, then pad the report with their youngsters’ school supplies and snacks for their backpacks. That receipt you rely on may actually show crayons and glue, but that doesn’t mean the manager will notice.

9. Post-Holiday Blues. Employees who blew their holiday budget on toys and gifts for their kids and other loved ones often find themselves saddled with a small mountain of debt. For budget relief, they sometimes turn to their employer to help foot the bill. Often, when you send out an email asking all employees to submit their expenses before the end of the year, the double-dippers come out of the woodwork, rushing to re-submit expenses from prior months in the final expense report for the year. Unfortunately, employers may not be the wiser if they rely on managers to catch these frauds. Few managers can remember every detail on every expense report they’ve previously approved. Expense report management systems do a fair job of catching duplicates on the same expense report, but things get more challenging when expenses are duplicated across multiple reports. Unfortunately, most of these expenses typically slip through the system.

A data analytics solution such as Oversight Insights On Demand®, powered by artificial intelligence and machine learning technologies, can detect these duplicates and other suspicious transactions better than any human can.

According to the ACFE’s 2016 Report to the Nations, organizations using anti-fraud controls, such as proactive data analytics, reported that fraud schemes were detected up to 50% faster and fraud losses were up to 54% lower. Then, once the anomalies are flagged, that’s where your shared services team or auditors go to work using our built-in workbench to resolve issues 50% to 90% faster.

There will always be a few people who try to double-dip – at the office party or on the corporate expense report. But if you’ve got Oversight on the job, monitoring across all your travel and expense spending, you’ll stop the petty thieves before they steal tens of thousands or even hundreds of thousands of dollars from your company.

Beverly Kays

Beverly Kays brings extensive finance, accounting, and supply chain operational experience to her role as Client Engagement Manager at Oversight Systems.

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