It is not a crime for authorized users to put personal expenses on a company-issued credit card. But there may be simple ways to recoup the costs and prevent future abuse.
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I own several FedEx routes and have credit cards for all my employees. They were all given with the understanding that they are to be used for fuel, truck parts and cleaning things for the trucks. I have noticed, upon auditing my credit card statements, that one employee has been using his card for personal bills. He is well over $1,000 as of today. How can I get my money back, and with what kind of criminal penalties can he be threatened? — Aaron
Argh! You must be very frustrated.
I ran your question past Leslie Tayne, an attorney in Melville, New York, who advises small businesses on debt and bankruptcy. It does not appear that you can threaten the employee with any criminal penalties for using his company-issued business card for personal expenses.
“I think it comes down to talking to the employee, confronting them on the charges and asking them to repay,” she said in an email. “If they refuse to repay or deny, then you can consider firing the employee and looking into other options. Unfortunately in the eyes of the credit card company, you issued the card and authorized the user so they will hold you responsible.”
Bear in mind that you don’t have the full story yet, so when you show the employee the credit card statement and ask the employee what happened, do so with an open mind. If the charges are recent and the payment due date has not arrived, it is possible that he planned to write a check to you before then — and may offer to do so on the spot. Another possibility is that someone else who had access to the card, such as a spouse or an identity thief, has made the charges without his knowledge.
Let’s assume that the employee was trying to sneak the charges through and fesses up — and you decide to give him another chance to make things right. One factor in your favor is the fact that you owe the employee money — in the form of his paycheck for the last week or two of work.
One way to recoup the money he owes you is to suggest deducting the funds from his paychecks over the coming month. (Work with your bookkeeper or accountant to make sure this is done correctly and that all of the proper taxes are paid.) Depending on what your employee earns, it may not be possible to withdraw the full $1,000 from one paycheck so you may have to arrange a payment plan where the debt is spread out over several paychecks. Of course, you do not want to deduct so much at one time that he can’t afford the gas to get to work. A Bankrate survey found that about 62 percent of Americans have less than $1,000 in savings for emergencies. If he’s using the credit card for personal bills, he’s probably not a saver.
In the meantime, if he did misuse the card, you might consider canceling his card and covering future expenses related to the repair and cleaning of his truck yourself. If he needs gas money, ask him to submit receipts for reimbursement in an expense account. Ask your employment attorney or human resources manager for guidance on how to handle the termination of the card in a way that does not embarrass him in front of colleagues and prevents legal problems later.
To make sure this doesn’t happen again, do two things.
First, think about whether you should switch to business fuel fleet cards. They are a type of card made for businesses such as yours, which must manage multiple vehicles. They can often be locked down so they can be used only for fuel, maintenance and vehicle repair, with the types of spending under your control.
Second, review your firm’s policies about company credit cards. Make sure you have a policy in writing that clearly states what the cards may be used for and what purchases are not covered. It should also state what will happen if an employee misuses the card. Review the policy with your attorney to make sure it is ironclad. Then circulate the policy to your team and make sure they confirm in writing that they have seen it. Of course, you should avoid discussing the employee’s specific case with the rest of your team, other than your human resources manager, as it is a confidential personnel matter.
If you decide to fire the employee, I would recommend getting legal advice on the best way to handle the termination. You may need to document the employee’s infractions and issue appropriate warnings, or you could risk legal headaches later. Good luck!