Oct 18, 2002 3 min read

WASHINGTON (AP) – A six-month White House crackdown has reduced personal shopping sprees with government credit cards, progress achieved by canceling hundreds of thousands of accounts, docking paychecks to collect unpaid bills and banning payments to thousands of businesses. The Office of Management and Budget said Thursday this was the first time it could report some success since it demanded that agencies rein in abuse of the charge cards. Congressional and agency investigators found the cards were used for goods and services at brothels, adult clubs, jewelry and electronics stores, concerts, sporting events and pornographic Internet sites.

The Defense Department alone is canceling some 400,000 travel cards by the end of this month, nearly 20 percent of the total issued by the federal government, OMB said.

The Education Department, meanwhile, blocked transactions to about 300 types of businesses to prevent use of cards for casino visits, limousine rentals and veterinary services, among other improper purchases.

A government-wide indication of progress is that 7 percent of travel card accounts are delinquent as of July, down from 13 percent last January.

Travel card holders pay their own bills and submit vouchers for reimbursement. Bills for purchase cards – used by those authorized to buy goods and services for their agencies – are paid directly by the government.

At the Department of Housing and Urban Development, unpaid travel card account totals plummeted from $389,000 to $15,000 in the past year.

The education and defense departments are using computer programs to identify suspect transactions.

Mitchell Daniels Jr., the budget office director, said many agencies still have not brought the credit card misuse under control.

“I’m far from satisfied,” Daniels said in an interview. “You need more than a few public hangings, you need genuine changes in procedures. We’re focused intently on reduction of temptation as well as pursuit of past misdeeds.”

All agencies were directed to report on further progress by Jan. 15.

As of May, OMB said there were 384,000 purchase cards and 2.2 million travel cards in use.

Since purchase card bills are paid directly by the government, it is a fraudulent transaction to use the card for personal items.

Even though travel card holders pay their own bills initially, it would be a misuse of the card for the employee to use it to buy personal items even if no reimbursement was ever sought.

A 1998 law requires that travel cards be used on official trips, and federal regulations encourage agencies to hand them out even to those who travel infrequently. The law, however, causes problems because it places cards in the hands of some employees with poor credit who cannot obtain a personal charge card.

The travel cards do not carry any interest and cardholders have three months to pay before they’re delinquent.

In addition, many travel card users – especially lower-grade enlisted men and women – have walked away from their bills, prompting the government to delinquent amounts from their paychecks.

Sens. Robert Byrd, D-W.Va., and Charles Grassley, R-Iowa, have inserted legislation in the Defense spending bill to help control charge card abuse in the Pentagon, by far the largest issuer of the cards.

The provision would limit accounts issued by the Pentagon to 1.5 million, compared to 1.7 million accounts that existed as of March; prohibit issuance of a government card to anyone found not credit worthy; and establish procedures for disciplinary actions.

The spending bill has passed both houses.

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On the Net:

Office of Management and Budget http://www.whitehouse.gov/omb/