Bill Requires Credit Checks on Travel Cardholders


A new bill before Congress would require agencies to run credit checks on all employees with travel cards, but travel managers say the costs to do this could outweigh the amount of money the government loses on card abuse.

The Defense Department, which has had serious problems with travel card abuse, already runs credit checks on employees with cards, according to the General Services Administration. HR 3329 and S 1744, House and Senate versions of the bill, introduced Oct. 16 by Sens. Charles Grassley, R-Iowa, and Robert Byrd, D-W.Va., and 14 representatives, would expand that practice to civilian agencies.

"That's very good, but who's going to pay for it?" said Donna Gentile, a travel card program manager for the Veterans Affairs Department.

GSA and Grassley's office did not know how much it would cost agencies to conduct credit checks, but Gentile estimated an individual credit check might cost $15. At that rate, it would cost VA nearly $650,000 to run checks on all employees with cards. That amount dwarfs the roughly $34,000 VA lost to delinquent accounts in fiscal 2003.

But for some, checks might be necessary, Gentile said.

"When someone starts abusing cards, it's their last resort," she said.

John Peterson, a senior program analyst for the Interior Department's Office of Acquisition and Property Management, also said credit checks might be prohibitively expensive. Interior has 55,000 travel cards issued.

Interior lost about $125,000 to abuse in fiscal 2003; it expects to recover about half of that.

A more realistic option might be to require checks only for employees receiving new cards, Peterson said. Interior issues travel cards to a few hundred new employees every month, he said.

Grassley spokeswoman Beth Levine said employees already with cards would have credit checks performed when their cards expire and need renewal. She did not know how much credit checks would cost and said that was not taken into account when the bill was drafted.

Levine said it remains to be seen if that idea is cost-effective.

Peterson took issue with another safeguard in the bill, which would require agencies to set limits about what kind of travelers can receive cards. If infrequent travelers do not get cards, another reimbursement system would be needed. Peterson said it is more cost-effective to have a single system.

And Steve McLaughlin, director of administration for the International Trade Commission, doubts if limits on the number of cards issued will work. Monitoring spending seems like a much more effective way of preventing abuse, McLaughlin said.

Travel card managers interviewed said that other safeguards proposed in the bill such as reviewing whether cardholders actually need cards, training cardholders and managers, and keeping records of each cardholder are already in place at their agencies.

Levine said the bill would get other agencies up to those standards. She said the bill was based on recommendations from General Accounting Office and inspectors general reports that criticized departments including Defense, Agriculture and Education.

Managers had some of their own suggestions on how to fix travel card abuse.

Gentile said her agency has had great success by limiting what stores will accept cards. Different types of stores have different merchant category codes, she said, and VA has blocked about 90 percent of those codes.

"Agencies should take responsibility for the actions" of their employees, Gentile said. "Why would you leave open that temptation?"

VA cut delinquency nearly in half in 2002.

Peterson said the government needs the power to pursue card abusers who leave their agencies. About 80 percent of abuse costs at Interior come from people who no longer work there, and banks cannot collect those debts.

Peterson said legislation should be passed that would allow agencies to pay back the banks, and then let the Treasury Department collect by garnishing wages or, if the abuser leaves the federal government, federal tax refunds.

Levine did not know if that was considered for this or any other bills.

Sue McIver, director of GSA's Services Acquisition Center, said agencies have had success keeping abuse down by restricting acceptable merchant codes, limiting spending and frequency of card use, and training sessions.

McIver said that from April to September, 4 percent of accounts were delinquent. That is down from 10 percent in January.

McIver hopes to get delinquency rates below 3 percent. She commended GSA, the Immigration and Naturalization Service (now part of the Homeland Security Department), the National Science Foundation, the Nuclear Regulatory Commission and the Energy and Justice departments for having delinquency rates of 1 percent.