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Government Charge Cards Still Being Abused

Photo: Hope Moore / Flickr

The Department of Defense (DoD) Inspector General (IG) found that DoD cardholders used their government travel cards for personal use at casinos and adult entertainment establishment (ok, I’ll say it….strip clubs).

The DoD IG found that cardholders made 4,437 transactions totaling $952,258 at casinos and another 900 transactions totaling $96,576 at strip clubs. The IG recommended that DoD create safeguards that will decline or flag improper charges and hold cardholders accountable, including:

  • identifying personal use of charge cards at casinos and strip clubs;
  • deactivating cards or limiting authorizations when the cardholders are not on official travel;
  • reviewing declined authorizations;
  • creating high-risk merchant categories, and possibly blocking usage at casinos and strip clubs;
  • detecting personal use activity; and
  • improving communications with banks about potential misuse.

The gaming industry has doubled down on its effort to remind the government that some transactions at casinos are part of official travel and therefore blocking the use of government charge cards isn’t in the best interest of the government.

Although the recent DoD IG findings are being sensationalized by the media, the improper use of government charge cards really is a longstanding problem that needs a genuine solution.

In the past, there have been improper charges on purchase cards, fleet cards, and travel cards at a number of agencies, including the Environmental Protection Agency, Internal Revenue Service, U.S. Postal Service, Veterans Affairs, and the Department of Homeland Security. There have been “fraudulent, improper, and abusive” purchases of lap dances and breast implants, as well as lingerie, internet dating services, video iPods, and lavish dinners. A congressional hearing last year found charge cards being used for gym memberships, gift cards, and services at hair salons.

During the Hurricane Katrina recovery, government employees purchased “a beer brewing kit, a 63” plasma television costing $8,000 which was found unused in its original box six months after being purchased, and tens of thousands of dollars for training at golf and tennis resorts.” Additional instances of noncompliance and inaccuracies were also found by the Department of Health and Human Services Inspector General.

According to documents the Project On Government Oversight obtained through the Freedom of Information Act, the Office of Management and Budget (OMB) found that 1,164 purchase or integrated cards were misused from April 1 through September 30, 2013 (document unaltered by POGO). According to that same document, the government took 824 adverse personnel actions, including reprimand, suspension, and removal.

OMB was quick to point out that the purchase card violations accounted for only 0.4 percent of the more than 300,000 purchase cards in use. That might seem like a tiny number, but this analysis only covered a six-month period. The rest of OMB’s purchase card violation reports are not publicly available. OMB did not respond to POGO’s request for the agency’s other purchase card violation reports, which are published twice a year.

Based on the troubled history of purchase-card misuse, Congress passed a law in 2012 to prevent such abuse, and many improvements have been made in systems, guidance and training, policies, memos, and reporting requirements. The OMB IG has also weighed in with recommendations. Despite those efforts, we still see instances like the DoD IG documented where government charge cards are used for questionable purchases at non-government purposes.

Purchase cards were thought to be a great idea that reduce costs to the government and allow quick and easy buying, which is true when used by responsible card holders. However, the government has to do a better job at identifying and preventing abusive charges that are not related to official travel and a genuine government purpose.

By: Scott H. Amey, J.D.
General Counsel, POGO

scott amey Scott Amey is General Counsel for the Project On Government Oversight. Some of Scott's investigations center on contract oversight, human trafficking, the revolving door, and ethics issues.

Topics: Government Accountability

Related Content: Inspector General Oversight, DOD Oversight, Waste

Authors: Scott H. Amey, J.D.

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