Mileage Fraud: A Growing Trend In The Mobile Workforce

Businesses are well-advised to be aware of the risks associated with mileage fraud. Unfortunately, many companies are unaware of how commonly mileage fraud occurs in businesses with mobile workers. Outdated mileage reporting methods — like relying on spreadsheets to track mileage without GPS verification — prevent companies from reviewing reports and detecting errors. Finance and HR leaders need to understand the implications of these outdated methods on their company’s bottom line.

A recent survey from Chrome River found that 35% of business travelers who committed expense fraud did so by exaggerating their business mileage. Estimating mileage leads to over-reimbursements that cost companies in the long-run. For the mobile employee, these estimations can result in criminal charges.

Minnesota superintendent of schools charged with felony theft

In one of many recent cases a superintendent of schools was charged with theft for allegedly submitting fraudulent mileage reimbursement claims to the Butterfield-Odin school district. The (now former) superintendent, Lisa Shellum, has been charged with felony theft as a result of these allegations.

Investigators found that Shellum collected over $1,300 in fraudulent mileage reimbursements, in addition to a travel stipend. She allegedly reported mileage for meetings and training events that she never attended as well as for a personal meeting with her attorney. In addition, some of these reported trips took place when she was on a leave of absence.

In response to these allegations, Shellum argued that the School Board had approved the mileage reimbursements. She has since sued the school district for wrongful termination and defamation. The school district agreed to pay Shellum $300,000 to drop the lawsuit.

Misreported mileage costing employers in over-reimbursements

This case is only one example of mileage fraud occurring within businesses whose employees drive for work. Without an automated mileage tracking and reimbursement solution, these businesses are unable to detect inaccurate mileage claims. For mobile employees, they also lack the technology to accurately capture their business mileage and are required to use manual processes. In fact, 76% of employees claim they’re able to commit fraud because of their company’s manual processes.

Mileage fraud extends beyond school districts lacking the technology to fairly and accurately reimburse their mobile employees. Chrome River finds that expense fraud costs U.S. employers $2.8 billion per year. How can businesses with mobile workforces avoid falling victim to this trend? Start by implementing modern solutions that save time and money for both employees and the company. Business leaders should offer a mileage tracking solution that makes it easy for employees to submit, and for employers to verify, their mileage. With more accurate mileage reporting, businesses are able to reimburse for the exact cost of driving for work – specific to the individual and location. The result? Businesses start saving on their T&E budget line item for mileage reimbursement.

Learn more about how to protect your business against mileage fraud in the article, Mileage Fraud: Too Common, But Easy to Address.

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The Author

Danielle Lackey

As General Counsel, Danielle is responsible for all Motus legal affairs and works with strategic business units to drive initiatives that bolster IRS and legal compliance for Motus clients. Prior to joining Motus, Danielle co-founded and served as CEO of Cadence Counsel, a company that helps law firms and companies thrive in an environment where work, as we know it, is rapidly changing. Before founding Cadence Counsel, Danielle practiced as a litigator at Latham & Watkins, representing major corporations and senior executives in complex civil and criminal matters. She earned her J.D. with Distinction from Stanford Law School and is a graduate of Brown University (Phi Beta Kappa, Magna Cum Laude).

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