Fuel card, or indeed credit card fraud, is big business and needs policing with the latest technologies in order to keep ahead of the criminals. Figures from Arval PHH show that in 2001, plastic card fraud caused losses of nearly £40 million to petrol retailers.
Arval PHH's Online Authorisation (OLA) service checks cards as they are used at the service station cash till, and accepts or rejects them according to its live database. This swayed the judges to award the Sixt Rent a Car-sponsored award to Arval.
It is a system the firm has had to work hard to get into the fuel network, reckons Danny Clenaghan, managing director of fuel and business mobility at Arval PHH.
He said: 'In the fuel environment, oil companies are notorious for being behind with technology when compared to retailers. It is because historically the average transaction value is low so banks have let the transactions go through.
'However, fuel prices have risen and the average transaction value has gone up by about £4 or £5 to £37. Banks have lowered the limit of what they like to authorise, so we decided to set up a service to tap into that.
'Our target is 80% coverage for the fuel station network and we'll achieve that and go a bit higher. Every garage will be covered by end of 2004.'
According to Clenaghan, there is £40 million worth of fraud within the petrol market annually and he's keen to do everything possible to reduce the exposure of the firm and its customers to it.
He continued: 'With OLA, we have seen fraud reduce as we now authorise every single transaction using real-time online reporting with postcode checking, so we can tell if transactions have been made in London and Manchester close together, or more than once in a day, or more than once at time.'
The service is 100% automated and works 24 hours a day, seven days a week. Arval also manages a service on behalf of large oil companies, running all their online transactions no matter what card – either credit or debit – is used.
He added: 'The network has been developed over the past year-and-a-half and has cost us several million pounds. Two years ago, we felt the fuel market was going to be left behind in terms of technology. While supermarkets and retailers were going online we were relying on fuel companies actually buying and upgrading point-of-sale equipment.
'We have worked closely with oil companies to upgrade the systems. It's a win-win situation – the retailer invests in technology, we provide the service and banks reduce their charges accordingly. It works from two angles: as a stand-alone business and as a service that protects our own card base. We have 1.3 million fuel cards, so it has been quite a success.'
One of the keys to the system is that because it is automated it takes the onus for spotting fraud, and dealing with it, away from the service station attendant. Previously, if they suspected foul play they would have to confront the customer and try to take the card off them.
With OLA, they can take the card off the suspected fraudster, cite that it's the system instructing them to do it, and it is not their fault. It means the number of rewards paid to attendants for illegal cards being confiscated has risen, which means fraud is reducing.
But there is still lots of work to do. While Arval PHH has been trying to clear up the forecourt, Clenaghan reckons there is plenty for fleets to do to combat card crime.
He said: 'The amount of fuel cards we see left in cars going to auction is amazing. A big education job needs to be done about fuel cards. It has to be protected just as much as a credit or debit card.
'There's a responsibility on the employer and the employee to make sure this company possession is looked after. We are producing policy guides for customers and we're calling on drivers and employers to make sure they look after cards as much as possible. Just because the company is picking up the bill, it doesn't make it any less important.'
Arval PHH is also using new computer systems for clearing up the problem of wrong inputs at the transaction.
Clenaghan added: 'We've spent a lot of time and effort on systems to correct that. We receive lots of transactions for cards where the vehicle registration doesn't match and we have systems that will correct that automatically.
'On the mileage side it is all determined by how good the fingers of the inputter are. We can automatically fix data if it is a long way out, and that's quite a big investment for the technology to do that.'
The next step is to persuade fleets moving away from free private fuel to use fuel cards.
Clenaghan reckons many companies need advising about what they should do with regard to managing the change, and putting a structure in place afterwards.
He said: 'Whether you get free fuel or not you still do business miles and you still need to have a method of reclaiming and managing that. As people move away from free fuel and hand their fuel card back, the company is going back to pay-and-reclaim, so it is giving employees 30 pence per mile or a similar amount and there's no control mechanism there.
'Companies should not just make ad hoc statements that say 'we're now removing free fuel as a benefit' without putting something in place that's going to help. They may think it's a benefit reducing the number of fuel cards but these people are still doing business miles. We're doing a lot of work to enable companies to allow employees to input private and business miles. Lots of firms are not reclaiming VAT in pay and reclaim, but the fuel card is part of VAT return.'
Other systems being put in place at Arval PHH to increase the efficiency of working out private mileage costs and safety of fuel cards include an interactive voice response programme, called a Mileage Capture System, which employees can ring into each month or every couple of weeks, input business mileage and help firms reconcile what they should pay employees or deduct from the payroll.
The firm is also using the internet for online billing as well for larger companies. Arval will trial this at the end of the year with a view to 20% of its customers using it in 2004. As well as OLA and billing, the internet is reducing the cost of business and allowing the firm to expand into areas it has previously not pushed hard into.
Clenaghan added: 'We are going to do a lot of work in the small and medium business market. We have not seen fuel cards penetrate in that area, so we have now established a small business division called Business Services aimed at sub-150-vehicle fleets.
'We'll soon find out whether it runs and it'll probably be more specific to business sectors rather than fleet size. We want to take the products we haven't traditionally aimed at that end of market which will help costs for small businesses, such as online application forms, online billing and e-commerce ordering. The cost of doing business has reduced through the internet.'