UH OH: Here’s How Your Business Travel Expense Reimbursements Could Put You On the Evening News

Barbara DeLollis flags a story about a “point scheme” that “came at taxpayers’ expense.”

A county employee in Santa Clara, California supposedly defrauded the local government by…

[Using] his personal credit card to pay for his travel expenses as well as the expenses of employees, all of whom are supposed to use a county credit card. In some cases, he would use his credit card to pay their expenses when he was not traveling with them. He’d get reimbursed for the expenses – and allegedly keep the points..

Wait. Say what..?

He’s accused of paying for legitimate business travel, and then getting reimbursed for the expenses. I’m shocked, shocked to find that expense reimbursements are going on here!


    This story actually has witnesses hidden to protect their identity!

He ran $55,000 in travel expenses through his personal cards for the points… over the past six years. That’s less than $10,000 per year. He wouldn’t even spend enough to earn top tier elite status with United or Delta if all of the money was airfare on either carrier and for his own travel.

And employees without county credit cards are permitted to use their own cards. The county has a clear policy to reimburse travel expenses put onto personal cards. Moreover, for the past six years the expense reports have been getting approved.

The underlying news story contends that there’s a clear policy that’s being violated. But here’s the policy:

Frequent flyer credits earned by county employees for travel on County business should be applied toward future county travel. Please note that personal use of airline frequent flyer mileage credit earned on County business is a taxable fringe benefit to the employee pursuant to the IRS regulations, and County has no intention to provide such fringe benefits

(Emphasis mine.)

First, the points-earning in question here is from credit card spend and not points earned from travel. The County has a policy, it seems, similar to what the federal government did until 12 years ago.

Second, the County ought not be in the business of giving tax advice since the IRS has clearly taken the position that miles earned from business travel will not be treated as a fringe benefit for tax purposes.

Keeping employee points earned through business travel – at least where those points are deposited into employee accounts rather than centrally pooled – turned out not to be an effective means of reducing the cost of business travel.

  • Employees who can’t keep their miles don’t add their frequent flyer account to bookings.
  • It’s tough to sort through which miles were earned through business travel versus other means like credit card spend, shopping portal points, etc.
  • Booking business travel on points is challenging becuase the needs of the former are often incompatible with the schedule flexibility needed to deal with capacity controls.

The federal government gave up the effort. Santa Clara apparently has not. But their policy doesn’t speak to points earned through credit card spend in any case, it seems… scary words like “scheme” and claims that this came at taxpayer expense notwithstanding. At most the use of a personal credit card, contemplated by company policy, meant any rebates the county might have earned by pushing the spend through their own card were not received (if the county has such a benefit).

The news story is aghast at the promised benefits of rewards programs!


    Gold Passport’s Jeff Zidell declares, “the only thing better than bacon is… free bacon!”

As so many news stories about travel are, this one gets confused between the points earned from credit card spend and the benefits that may have been accrued by putting a hotel loyalty program account number onto someone else’s room that wasn’t aware they could have added their own. I have a feeling some of my readers may even have done similar things in the past…


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. When I worked for the Trip Advisor Media Group, I was given and instructed only to use a corporate credit card issued to Cruise Critic, with all the points accrued to President of CruiseCritic.com’s personal account. Not exactly a way to motivate an employee or engender their loyalty.

  2. Isn’t this similar to at your nonprofit, where employees are required to have purchases occur on your cc with you keeping the points (heard this from an inside source)?

  3. @Tyler – Comment of the week. Within his power, but you gotta think Gary would be more mature than that. Would love to hear more.

    Though I will say this station’s investigative unit is known for blowing things out of proportion. They have a big budget, but are stuck covering a boring local beat, and you get stories like this.

    The guy earned about $1,000 worth of points over 6 years. Sheesh.

  4. Santa Clara County resident here. This is f#!$ing stupid

    No tax payer dollars were misused. All that travel spending is sunk cost. Any points earned on county business *could* potentially offset future spending, yes, but that’s a reduction, not extra cost. Also, most sensible business and the federal government got rid of this stupid policy because they realized it doesn’t work but only antagonize the workers.

    The only people that he took advantage of are his coworkers that could be earning those points themselves, and half of the time people too lazy to give a shit.

    Distasteful because he took advantage of his coworkers, but hardly the “Oh noes the taxpayers!” story they are making this out to be. The only people should care are his coworkers. No one else outside of Department of Child Support Services should give a shit.

    I wish the news would focus on other problems in our county instead of this nonsense.

  5. As another Santa Clara county taxpayer and participant in this blog’s comments, I agree with Ben. I don’t see this as a problem with how my tax dollars are being spent.

  6. Controversial news out of Santa Clara County. They’ve stolen $1.6 billion of sports team from San Francisco.

    Ow. It hurts to bury one’s tongue that far in cheek.

  7. Whenever something like this happens, there’s something we’re not being told about why this individual was targeted for hate. Is he the one black employee, is she the one female in a position of power, is he gay…is he or she just an unpleasant person? Impossible to tell if you’re not from this particular county. Can you people who are actually from this county enlighten us? If he was a bully forcing everyone to credit their spend to his credit card, I have no sympathy. If he is instead the bullied and some jerk found a way to try to get him fired for doing something harmless, I have a great deal of sympathy. We don’t have enough information.

  8. @Peachfront Could be a white male working in a gay female office in a liberal political environment? Sword cuts both ways in the Bay Area……….

  9. Both companies I have worked at (consulting firms where employees travel heavily) require all travel expenses to be charged to the corporate card. Multiple violation of the policy can result in being fired, or at least getting a lower rating in the annual performance review. That said, no one is going to compare the cc info on your receipt with your corporate card number. However this guy crossed the line by using his personal card for his whole team & requesting reimbursement under his name. I’m pretty sure that’s what set off the alarm when they noticed that he had an unusually high travel expense.

  10. What’s with this “You may also like” thing that pops out from the right side of the screen? I visit your site at least daily, given how often you post, but it’s maddening that the thing won’t just go away when you hit the x to close it. Please make it stop.

  11. Ditto what Christian said. PLEASE–how do we get rid of this thing. I’m about to leave the site, it’s so damn irritating.

  12. The company I am at would never come at me because of charging my costs, getting reimbursed, and making points or whatever.

    Paying OTHER people’s expenses, especially I wasn’t on the trip, might not pass the smell test.

  13. Quelle horreur! Knowing a little bit about how government agencies work, I’m going to guess that the county credit card is NOT a reward card and doesn’t earn points for anyone. In fact, I would be absolutely shocked if it paid any sort of return at all.

    The only conceivable expense to the county that I can think of is the additional administrative expense of processing his reimbursement requests, rather than simply paying off centralized bill. That hardly seems something to get outraged (Ed: OUTRAGED!) about. Especially considering how frequently centralized .gov credit cards are abused. I’d guess that there are no trips to strip clubs, purchases of alcohol, purchases of clothes, or gambling expenses listed in his reimbursement requests.

    This is indeed a tempest in a teapot, but it’s also an example of how the normals see the activities of points fanatics. They are afraid of things they do not understand.

  14. I’ve frequently charged large expenses for entire teams to my personal card at different employers and always been reimbursed without a question. In fact, it is often preferred to have a single reimbursement for say $40k than multiple $800 reimbursements to make to 50 different people due to the paperwork and effort involved.

  15. Wow. I would never have thought of this. Perhaps he should be invited as a speaker for the next Frequent Traveler University?

    And, seriously, the “you might like this” box is, to put it kindly, what HiltonHHonors would call an “enhancement”.

  16. I happily charge the entire expenses of traveling groups to my personal card for lots of points, and everyone else reimburses me with checks, but that’s not job related. I think that what he did was harmless, but if it’s a violation of his employer’s policy it is still inappropriate and a reason for consequences. The policy described here is hardly enlightened, but how many of us work where we think all policies are?

    I would concede one point: To the county, reimbursing expenses submitted by people who are not knowledgeable in the travel field, and not motivated to find the best deals either, would be more expensive than demanding it be handled centrally.

  17. Meanwhile somewhere in Santa Clara county three road workers are leaning on shovels watching one guy do all the work yet still collect the same paycheck. If we were to actually address waste and abuse by city/county/state/federal workers this non issue would be nothing.

  18. @Christian,

    You can stop 99% of the ads, “join our mailing list”, and other popup crap that most sites inundate you with these days. You’d be amazed at the amount of trackers/beacons and other crap that sites use.

    By choosing not to use the IE browser first (try Firefox or Opera) and install NoScript, Ghostery and Adblock Plus browser extensions – they will require a little tweaking/white-listing but they work freaking GREAT.

  19. My company tries to sign people up for their corporate card. I did some research, saw that they still pulled my credit for the app and that I’m still liable for the bill if my company missed a reimbursement or suddenly closed shop. No thanks. If I’m liable for charges, I’m going to charge it where I want.

    Not to mention, misuse of a corporate card can get you fired. Not to say a certain reimbursement can’t, but that’s within my control.

  20. No one sees how this was wrong? The article mentions that he misused our tax dollars by flying to conferences solely for the purpose of checking everyone in under his accounts! This alone was a total waste of money and it was obvious what his intentions were.

Leave a Reply

Your email address will not be published. Required fields are marked *