Credit card skimmers are a headache for fuel retailers, but there is more than one way that fraudulent actors can target fleet spend.
In addition to stolen credentials and skimmed cards at the fuel point-of-sale, employees are often able to overspend with their commercial fleet card products, or file fraudulent expense reports. These tactics cast a wide net of fraud over the fleet card industry – from issuers and acquirers to fleet managers, employers and employees themselves.
Research published in 2016 from Shell found that nearly two-thirds of surveyed fleet managers cited fuel fraud as a major problem, with professionals acknowledging an array of weak points that expose a company to losses. More than a third cited lack of driver education, for example, as a barrier to heightened fraud detection – 61 percent of fleet managers told Shell they are familiar with the latest fraud technologies, but just 30 percent of fleet drivers said the same.
While fleet card fraud is certainly a threat to end customers – the businesses and employees using those card products – it is also threatening to fuel retailers, as well as card issuers and acquirers, said Dr. Mark Goldspink, CEO of fraud detection firm The ai Corporation. The company’s latest solution, EazyFuel, offers fraud and risk management directly to all players in a fleet card transaction, in addition to payment processing and other capabilities.
Goldspink recently told PYMNTS that fleet card-related fraud goes far beyond skimmers at the POS.
“There are fraud activities around KYC [Know Your Customer] in the application processes,” he said, adding that a recent eBook published by The ai Corporation highlighted various tactics by fraudsters in this area. A group of fraudsters may impersonate a legitimate business to open a fleet card account, for example.
These crimes certainly harm corporate spenders, but also expose issuers, acquirers and fuel retailers to security threats. The widespread nature of this issue, said Goldspink, is why the company’s fuel card solution aims to address points of friction across all of these participants, not just the end customer.
“My background is in the oil industry,” he said. “I want to help clients regain customer interaction, and a lot of that has been lost in the complexity of solutions. We want to demystify solutions, and make them simple so our customers can attract their own customers.”
Fraud detection and mitigation are essential to an enhanced customer relationship. And in order to offer that fraud detection, Goldspink said, the company has to focus on Big Data – and technologies like artificial intelligence and machine learning – to ensure that a protective net is large enough to cover all of those customers, from retailers to end users.
“We apply artificial intelligence, and consider our analytical and fraud systems as data decision engines,” the CEO explained, adding that considering the amount of data that must be analyzed, technologies like AI are the only way to go.
That data includes abstract information like customer behavior, as well as massive troves of hard data amplified by the fact that The ai Corporation offers payment processing and targets clients beyond the end user. According to Goldspink, this enables the company to access more robust information necessary to adequately detect and mitigate fraud.
“It’s a combination of essentially using data tools that allow you to give insight into what’s happening,” he said. “Some of these we use today for fraud prevention activity, and we’ll use those tools to expose more information back to the issuer in terms of what’s happening.”
Offering an end-to-end solution for issuers not only means seamless adoption and integration of the fleet card solution, he continued, but also means more opportunities for The ai Corporation to access data for fraud analysis and prevention purposes.
In addition to EazyFuel, The ai Corporation also recently published an eBook outlining the various areas of fraud risk exposure faced by players in the fleet card industry. That includes card skimmers at the POS, driver fraud via abuse of company cards, data breaches via lost or stolen cards, application fraud, the creation of counterfeit cards via stolen permanent account numbers, card swaps and more. The eBook highlights the importance of customer education in identifying and preventing these scenarios.
Shell’s own research similarly emphasized the importance of employee education.
“One of the biggest problems businesses have in combating fraud is that, too often, the latest guidance and information doesn’t make its way from the office to the driver’s seat,” said Shell U.K. commercial fleet sales manager Scott McGregor in a statement at the time. “Online card monitoring, real-time detection and preset fill-up limits can be very effective in reducing criminal behavior. But to really win the battle, businesses must also invest the necessary time and resources into training staff on how to be smarter about fraud protection on the ground.”
With so much data at payment companies’ fingertips, however, the value of real-time monitoring and detection is on the rise. As The ai Corporation continues to round out its offerings for the fleet card market, fraud mitigation will be the cornerstone of the application of technologies like AI and machine learning. According to Goldspink, fraud mitigation is only one part of the fleet card sector’s rising focus on innovation.
“We are seeing demand from the end user because of the way payments is changing,” he said. “People want the ability to pay through various means, and that’s not any different in the B2B environment – especially in the fleet world, where you have people moving around. You’ve essentially got lots of drivers, and you have to aggregate that payment data back to a single account.”
It’s certainly a challenge for FinServ companies to address, but one that offers an opportunity to not only make fleet payments more seamless, but to collect more information for fraud mitigation purposes.
“The demand to pay in a seamless manner is a function of the market, and I don’t think the fleet card industry can stand back and watch this happen,” Goldspink added.