In our fast-paced world of technological innovation, fraud has managed to evolve at an equal pace, adapting to exploit existing and emerging vulnerabilities. For fleets in particular, the challenge of friendly fraud and skimming casts a large shadow over their operations and finances.
In this post, we outline the true cost of friendly fraud and skimming, so fleets can understand the full financial repercussions that have implications throughout their entire operations.
Skimming: A Billion-Dollar Heist
Skimming is the act of installing illegal credit card skimmers on gas pumps, ATMs, and other point-of-sale terminals, enabling the theft of credit and debit card information. According to the FBI, these devices cost financial institutions and consumers more than $1 billion each year.
While skimming isn’t new, its explosive growth is alarming. According to FICO, card skimming fraud in the U.S. soared by over 700% in just the first half of 2022. The Federal Trade Commission reinforced the concern with recent data from August 2023: in the first six months of 2023 alone, card compromise reports (CCRs) saw a year-over-year increase of 20%. Even more disconcerting was the spike in the total number of compromised cards—a staggering 77% jump from 2022, affecting nearly 120,000 cards.
Fuel Card’s Double-Edged Sword
Fleet fuel cards have long been touted as an effective strategy for managing fuel-related expenditures. The concept is straightforward: provide drivers with individual credit cards for work-related expenses, streamlining both spending and reporting.
However, cards like the Motive Card, accepted universally where Mastercard is, have their downsides. Their convenience can unfortunately pave the way for “friendly fraud,” a term used to describe fraud originating from legitimate transactions, often without the theft of information. For instance, an employee might claim a malfunctioning fleet card at the pump and instead pay inside, while also making unauthorized additional purchases.
Reports by the Mercator Advisory Group (2023) and KPMG (2022) both highlight a startling fact: fuel card fraud can shave off between 5% to 10% of a fleet’s annual fuel spend. The Fuel Card Fraud Association (FCFA) echoes this grim sentiment, providing resources that reiterate the hidden cost of this fraud. However, data from Car IQ suggests that this number is much higher, with losses ranging from 12-15%.
Beyond the Direct Financial Losses
The fight against fraud, especially in the fleet industry, is a continuous battle. Companies need to stay a step ahead because the true cost of friendly fraud and skimming goes beyond the direct financial losses we’ve outlined above. Fuel card fraud can distort data on fuel consumption for your vehicles, leading to misguided decisions that impact fleet management strategies and, ultimately, your bottom line.
Fuel Your Fleet with Car IQ Pay
With Car IQ Pay, you can manage your fleet in ways you never dreamed of. Forget about physical credit cards and random, unapproved charges—our cutting-edge digital vehicle payment system lets you control driver payments, lets the drivers pay seamlessly, and consolidates both vehicle and transaction data in one place. This not only provides you with an incredibly detailed view of your fleet’s operations but also an incredible level of efficiency and control.
Interested? Let’s start a conversion today.