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Wednesday August 15 3:25 AM ET

Government Credit Cards Growing
By DAVID PACE, Associated Press Writer

WASHINGTON (AP) - Government employees with 3.1 million official credit cards will charge an estimated $19 billion this year, aggressively using a program created to streamline purchasing but often slow to detect abuse.

In the U.S. attorney's office in Los Angeles, an employee charged on her government card almost a half-million dollars in personal expenses over three years before she was caught, court records show.

Education Department workers used their cards several times to buy pornographic materials from an Internet site. Their purchases raised no alarms until congressional auditors found them.

Just in this fiscal year, which began Oct. 1, the five banks that provide credit cards to federal agencies already have written off close to $20 million in bad debts run up by employees using government travel cards, records show.

The government has enough active charge cards to equip three of every four of its 4.1 million civilian and military workers. At least 15 agencies have more credit cards than employees, according to an Associated Press review of records obtained under the Freedom of Information Act.

Those charged with monitoring the explosive growth say the sheer number of cards distributed by agencies makes it difficult to monitor spending and detect abuse.

``It's almost impossible to do real tight controls unless you've got a whole army of reviewers,'' said Gregory Kutz, a congressional auditor for the General Accounting Office who recently highlighted credit card abuses at Navy operations in California.

AP reported last month that Pentagon employees with 1.8 million credit cards charged $9 billion in 2000. One bank wrote off $58 million in unpaid balances on military travel cards under the system where the company, not the government, bears the bad-debt risk on government credit cards.

The Federal Emergency Management Agency, which provides disaster relief, and the Securities and Exchange Commission, which regulates stocks and bonds, each has more than twice as many credit cards as employees, according to records maintained by the General Services Administration.

``That's certainly one area we're looking at, whether we need to reduce the number of cardholders,'' said Debra Sonderman, who manages the Interior Department's credit card program. Her agency has 82,835 credit cards for just 68,000 workers.

Federal agencies turned to credit cards in the 1990s to cut red tape and speed purchasing. Cards were issued for office supplies, travel and automobile maintenance and fuel.

Officials credit the effort with eliminating unnecessary paperwork and allowing workers to get bargains by buying quickly. The program last year earned the government $50 million in rebates, and officials contend abuses by a few shouldn't tarnish a good idea.

After years of explosive growth and little oversight, however, the initiative is being looked at by a Congress wary that it has become too easy for employees to buy with plastic and then walk away from the debts.

``The government should be a good actor in its business dealings,'' said Sen. Charles Grassley of Iowa, the top Republican on the tax-writing Senate Finance Committee.

Grassley has led efforts to highlight Pentagon credit card abuses and is expanding the review to all federal agencies.

By any measure, federal workers are using all three types of government credit cards more frequently:

-Charges on purchase cards, used for supplies costing up to $2,500, have increased 28 percent since 1999 and are on track to top $13 billion this year.

-Charges on travel cards, mandated by Congress in 1999 for all official federal worker travel, are on pace to reach $5.3 billion this year, an increase of 20 percent since 1999.

-Federal fleet charge accounts, used to fuel and maintain government vehicles, have more than doubled in the past three years to a projected $535 million in 2001.

Workers with purchase cards are supposed to get prior approval. And those purchases are billed directly to the government.

Employees with travel cards charge expenses for official trips, get reimbursed by their agencies and then must pay the bill. The government isn't liable for its employees' failure to pay.

The GSA says the five banks that handle government accounts have written off $71 million on travel cards since 1998. Collection agencies have recovered about $24 million from delinquent federal workers.

The government doesn't pay annual fees and finance charges like regular customers, but the Treasury is charged interest and late fees when agencies don't pay on time.

Federal employees often are issued cards without credit history checks. And even a bad credit report doesn't necessarily stop an employee from getting a card.


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