Section V: Preventative Measures

2. What are some examples of charge card misuse?

Charge card misuse can take many different forms, but here are some of the most common examples:

• Purchases exceed the cardholder's authorized limit. Cardholders may be limited to a specific dollar limit per transaction, per day, or per monthly billing cycle. As an A/OPC you should set authorization controls so that transactions exceeding the authorized limits would be declined at the point of sale. For instance, if a cardholder is not authorized to spend more than $2,000 per billing cycle, you should not set the monthly spend limit at more than $2,000. This protects the cardholder and the Government from misuse.
• Purchases for which no funding is available. Federal law requires that funds must be available before any Government purchase is made. It is up to the cardholder to ensure that the funds are available prior to making any transaction with the Purchase Charge Card.
• The cardholder allows other people to use his/her Purchase Charge Card. Cardholders must take steps to ensure the security of the Purchase Charge Card. That means that the Purchase Charge Card must be used only by the cardholder and only for official Government business. If the cardholder allows others to use the Purchase Charge Card, the cardholder will be held personally liable to the Government for any unauthorized transactions. As an A/OPC, you should make sure that the cardholder understands that the Purchase Charge Card is not to be shared and must be properly safeguarded when not in use.
• Split Transactions. The Federal Acquisition Regulation (FAR) limits the dollar threshold for micro-purchases to $3,000 (or $2,000 for construction). Any purchase that, as a whole, would exceed the micro-purchase limit - but is separated into smaller transactions in order to avoid the micro-purchase limit - is considered to be a split transaction. Split transactions are prohibited. Let's assume that Joe, a cardholder, needs to buy one hundred widgets, and the total value of the transaction is $4,000 (or $40.00 per widget). Joe knows that the micro-purchase threshold is $3,000. In order to make the transaction "fit" under the micro-purchase limit, he asks the store to split his order into two separate transactions: one for $2,800 (70 widgets) and one for $1,200 (30 widgets). This action is called a "split transaction" and is a violation of Federal procurement regulations. As an A/OPC, you should make sure that your assigned cardholders are aware of the prohibition on split transactions and should monitor cardholder use to check that split transactions are not occurring. The most common indicator of a split transaction is multiple transactions with the same vendor for the same items on the same day (or within a period of a few days), where the total amount of the transactions exceeds the micro-purchase limit.
• Products or services that do not meet the Government's requirements. Cardholders must use discretion when making purchases to ensure that they meet the Government's requirements. Due to the wide array of products and services available, there may be occasions when cardholders may be requested or tempted to buy luxury or deluxe versions of products and services that exceed the Government's actual requirements. For instance, it would be questionable for a cardholder to buy a $500.00 designer fountain pen when there are many quality fountain pens available for $50 or less. As an A/OPC, you should be prepared to question any purchase that appears to be excessive or unreasonable.
• Purchases for personal consumption. All purchases must be for official Government use only. Thus, any purchase made that is for the cardholder's personal use rather than for official Government purposes is considered to be misuse. For example, a cardholder who uses the Purchase Charge Card to buy himself lunch because he had no cash available that day is misusing the Purchase Charge Card. As an A/OPC, you should be aware of transactions that appear to be for personal use only.
• Purchases that are not authorized by the agency/organization. Your agency/organization may have additional limits on the use of the Purchase Charge Card, such as limiting certain categories or types of products or services. As an A/OPC, you should be aware of your specific agency's/organization's restrictions to ensure cardholder compliance.