How Can Better Mileage Reimbursement Management Help You Fend Off Fraud?

In Iron County, Utah, a former public official recently pleaded guilty to theft by way of mileage reimbursement fraud and misuse of public funds. She’d submitted fraudulent mileage reimbursement records claiming she traveled 5,000 miles to meetings she either attended virtually or not at all, incurring around $2,700 in improper reimbursements. In addition to losing her job, she was ordered to perform community service and repay the county for the stolen funds.

Unfortunately, she’s not alone. Mileage reimbursement fraud is one of the most common forms of employee theft, and this and other forms of expense fraud can be costly! In its 2024 report on occupational fraud, the Association of Certified Fraud Examiners (ACFE) found that organizations lose an estimated 5% of their revenue to fraud every year. The median loss per case is around $145,000, while the average loss per case is $1.7 million, with total losses exceeding $3.1 billion.

How does this fraud manifest in companies like yours? Employees might think that padding mileage is a harmless exercise to boost reimbursements for travel and other expenses, but across a workforce of mobile employees, expense fraud adds up fast. At the current standard mileage rate of 70 cents per mile, a single employee recording as little as 20 extra miles per day could cost their employer around $3,000 a year in reimbursement for miles they never drove.

So how can you protect your company from the high cost of employee mileage reimbursement fraud? In this article, we’ll examine the different forms of fraud, why it often goes unchecked, and the best steps you can take to prevent it.

What Does Mileage Reimbursement Fraud Look Like?

Mileage reimbursement fraud is a form of expense fraud in which employees misinterpret or manipulate their mileage logs or expense reports to obtain undeserved reimbursement for their work-related travel expenses. 

Fraud Comes In Many Forms

Mileage reimbursement fraud can manifest within an organization in a few different ways. A common form of travel reimbursement fraud is mileage inflation, in which employees exaggerate the distance they’ve traveled or round up their numbers in order to receive a higher reimbursement payment. 

Another way employees commit travel expense fraud is by requesting reimbursement for personal, non-work related trips, or by submitting expense reports for commuting mileage, which is ineligible under the IRS’s criteria for accountable reimbursement. Employees may also attempt to commit reimbursement fraud by submitting duplicate mileage logs for the same trip, or by altering or even falsifying logs and other forms of documentation altogether.

Schemes Are Getting More Sophisticated

Another complication for businesses looking to curtail and prevent expense fraud? As the landscape of business and expense reporting gets more advanced, so do methods for committing mileage reimbursement and other forms of expense fraud. Employees might use spoofing apps on their phones to alter their GPS data on company-issued mileage tracking software, inflating miles traveled, or tampering with settings to generate routes that appear longer. For employers, it can be difficult to differentiate between real and manipulated data when approving trips on expense reports.

Fraudsters may also fabricate meetings or site visits that never happened, perhaps going so far as to create fake client contacts or appointments to support their claims. Employees may also take longer, less efficient routes between work-related trip locations, increasing mileage without technically breaking reimbursement eligibility rules around destination or purpose of travel. For management and supervisors, challenging this kind of mileage inflation can be difficult if the purpose of the visit was legitimate and business-related.

What Contributes to Mileage Reimbursement Fraud?

Obviously, the blame for mileage reimbursement and other forms of employee expense fraud lay at the feet of the fraudster. However, certain organizational structures can make fraud easier to pull off without the culprit getting caught immediately—or at all. 

Manual Management

If your organization relies on manual reporting systems for mileage reimbursement tracking, logging, and report submission, you might be making it pretty easy for employees to execute mileage reimbursement fraud. Mileage reporting systems in which employees have to document their own mileage using their vehicle odometer readings make it easy to calculate and submit incorrect mileage totals on accident, let alone intentionally. Other forms of manual mileage reimbursement, including physical paper expense reports or digital spreadsheets, aren’t too much better. Paper reports can easily be duplicated, falsified, modified, or even lost. Spreadsheets are all-too-easy to manipulate, as well. 

No Controls

A workplace that lacks proper internal controls for employee travel and expense reimbursement also makes it easy for potential swindlers to commit reimbursement fraud. Does your organization have a mileage reimbursement policy? What about standardized company-wide processes for expense report approval? If the answer to either or both of these questions is no, then your business could be facilitating employee reimbursement fraud. 

Without clear, consistently enforced policies and other controls in place to regulate expense and reimbursement, business will have a tough time proving that an employee knowingly broke that business’s rules around mileage reimbursement, and a tougher time adequately disciplining that employee.

Cultural and Behavioral Factors

Consider as well the ways in which the environment and culture of a business could contribute to an employee’s decision to commit expense fraud. Employees will be more likely to pad mileage, submit personal trips for reimbursement, or commit other forms of mileage reimbursement fraud if they feel they are not being properly reimbursed for their work-related mileage. 

If, as mentioned above, a business lacks proper internal controls or oversight around expense reimbursement, this may give the impression that employee mileage fraud isn’t considered a big deal, and that there will be no real consequences for the culprits. 

How You Can Protect Yourself From Fraud

Establish a Comprehensive Mileage Reimbursement Policy

The first way an organization can take steps to prevent mileage reimbursement fraud is by creating and enforcing a company-wide mileage reimbursement policy. This policy should include a definition of reimbursement mileage, and set expectations for how employees will be expected to keep accurate, up-to-date records. 

This policy should also describe what internal controls the organization has in place for reimbursement; Submitting expense reports should not be too difficult or complicated for your workforce, but it’s also important to lay down some ground rules. This policy should also clearly state consequences for employees who submit fraudulent claims. 

Separation of Duties

Within your organization’s process for mileage logging, reporting, and reimbursement, ensure that all steps are clearly outlined and distinct, differentiating between mileage reimbursement and other employee compensation processes. Establish multiple levels of review and approval for employee expense reports, and ensure that those reviews are conducted objectively and fairly. No employee should be in charge of approving their own expense reimbursement! 

Regular Reviews and Audits

Maintain accountability within your company by conducting periodic audits to detect any discrepancies in employee mileage reimbursement reports. Utilizing data analytics can also help identify patterns in reports that may indicate fraudulent behavior. 

Training and Education

A mileage reimbursement policy is only effective if employees understand and follow it. To ensure compliance, provide regular training and educational sessions covering key processes like mileage reporting, expense submission, and reimbursement. Employees should also understand the consequences of fraud—not just for the company, but for their colleagues and themselves. Additionally, leadership plays a crucial role in reinforcing these policies. Managers and supervisors should lead by example, demonstrating proper adherence to reimbursement guidelines to foster a culture of integrity and accountability.

Technology Can Make Your Job Easier

Technology makes many elements of modern life smoother and easier, and mileage reimbursement is no exception. Consider using automated mileage tracking systems to help facilitate accurate, efficient expense reimbursement processes. These digital tracking systems eliminate the need for employees to manually track and log their work-related mileage, instead automating and digitizing the tracking process.

Automated mileage reimbursement software standardizes expense reporting, report submission, and expense report approval, making it far more difficult for employees to submit duplicate reports, pad mileage in their logs, and attempt other forms of mileage reimbursement fraud. Reimbursement software can even help identify fraud by automatically flagging these behaviors for manager review. Streamlined digital processes also mean fewer errors, such as calculation mistakes or mistranscribed data. 

Reimbursement software can also integrate with existing company accounting or payroll systems, ensuring faster reimbursement payments. Faster and more streamlined reimbursements will help your hardworking employees feel like they’re being reimbursed in a timely and fair manner, making them more satisfied—and less likely to feel like they’re entitled to commit fraud for a few extra dollars. 

SureMileage Makes Mileage Reimbursement Better for Everyone

What’s the best way to protect your business from mileage reimbursement fraud? That’s a big question, but CompanyMileage has the answer. SureMileage, our mileage reimbursement software, is designed to streamline and automate the reimbursement process with as little room for fraud and error as possible. 

SureMileage uses a point-to-point reimbursement method, wherein employees report the start and end points of a trip in the system or using our mobile application, SureMobile. The software calculates the best route between these points, and the exact mileage for reimbursement. SureMileage also utilizes an integrated address book, which saves addresses in real time and can be populated with current client lists. 

Once employees quickly and easily submit expense reports, those reports move through an automated, customizable approval workflow. From there, our software integrates with all major accounting and approval software, guaranteeing a fast, accurate reimbursement process from start to finish. 

To find out more about how CompanyMileage can help your company tackle mileage reimbursement fraud and perfect expense management, contact us for a demo today!