New Credit Card Practice Under Scrutiny

[Jul 31, 2007.]

Some universities have been trying to cut costs by issuing university business credit cards to their employees. The practice can be less expensive than other means of trying to pay school bills. However, Arizona universities have run into a stumbling block in their effort to promote cost efficiency: financial abuse.

The Arizona Republic newspaper has found that a number of campus employees are abusing the privilege of purchasing cards, or "p-cards." Instead of using the charge cards for their intended purpose, some employees are using the cards to buy gas, download songs from the Web, finance their vacations or buy furniture for their homes.

Credit card use at three Arizona state universities has increased more than 3 fold in the past 4 years, with some 5,725 cards in circulation. Total charges on the cards amounted to $147 million last year.

Amazingly enough, a University of Arizona worker was alleged to have charged more than $80,000 worth of personal expenses on a college credit card in 2006. Nearly all the workers caught for making private purchases on university charge accounts were dismissed or have voluntarily left their jobs. Since the year 2000, 13 employees have been caught making inappropriate purchases totaling more than $100,000.

The Arizona Board of Regents is going to be considering a plan to have performance reviews of university employees include an "internal controls" section which would include P-card usage.

Some of the more outrageous P-card purchases include CDs, video games, toys, clothing, holsters for personal guns, living room and dining room furniture, and an espresso machine.

However, it should be pointed out that university officials believe only a small fraction of employees have misused their P-cards. They add that the money saved in paperwork expenses makes the cards worthwhile, despite the risk of misuse. University officials also point out that each school conducts random audits, and that a given university can always ask for an employee's receipts in order to verify the worthiness of purchases.

Julie Ann Amos
July 31st 2007
Recent News

• New Credit Card Scam Uncovered
  Internet experts say that credit card thieves are employing a new tactic: making donations to charity using pilfered charge cards. The strategy may enable thieves to steal more money than was possible in the past. [July 31st 2007]


• Consumer Borrowing Rises Dramatically
  The Federal Reserve is reporting that consumer borrowing skyrocketed in May—the greatest increase in credit card debt in 6 months. Consumer credit jumped 6.4%, which was a monumental increase over the 1.1% jump in April. In fact, the increase in May was just about twice the amount that financial observers were expecting. [July 31st 2007]


• Credit Card Companies Offer New Insight Into Consumer Spending
  The credit industry has uncovered some surprising news about consumer spending. Apparently, young people are going to become bigger spenders than their Baby Boomer parents. [July 25th 2007]


• Reasons for Bankruptcy are Varied
  A new study indicates there are a myriad of reasons behind consumer bankruptcies. The report shows that the vast majority of respondents, 63%, said they were overextended on credit. [July 25th 2007]


• Fed to Protect Homeowners from Mortgage Abuse
  The chairman of the Federal Reserve Board is determined to ensure that prospective homebuyers are shielded from lending practices that could be considered abusive—a move that some legislators say is long overdue. [July 25th 2007]


• New Hope on the Credit Card Front
  While the housing market appears to be sluggish and the overall economy may appear to be a mixed blessing, the outlook appears to be bright for credit card companies and their cardholders. [July 19th 2007]