Preventing Fuel Theft: Unique Insights from a Former Insurance Adjuster and Business Owner

Fuel theft is a major issue for commercial auto fleets, affecting their operational costs and financial performance. 

As someone who has been a business owner and an insurance adjuster and has dealt with fuel theft cases personally, I have gained valuable insights on how to prevent and handle fuel theft in commercial auto fleets. In this blog, I will share my knowledge so you can better protect your company from fraud.

Understanding Fuel Theft  

Fuel theft can occur through various means, such as siphoning, fuel card fraud, and internal employee theft. Recognizing the vulnerabilities in your fleet's fuel management system is the first step toward implementing comprehensive preventive measures. 

In my experience, most fuel theft incidents are committed by employees. While certain industries may be more vulnerable, it is a reality that employee fuel theft happens more often than we would like to admit.

Typically, employees misuse the company fuel card for personal, non-business-related fuel purchases. They fuel their private cars, their spouse's or friends' vehicles, or use the fuel to fill jerry cans and snowmobiles. Employees may even sell gas to others at a discounted price by using the company card to purchase fuel and then charging a lower amount in cash. They could put $100 worth of gas in their friend's car and charge them $80 in cash.

Compounding over time and executed by multiple people, even minor incidents can significantly damage your fleet's financial health.

The Financial Impact Of Fuel Theft

The larger the fleet a company operates, the more significant the financial consequences of fuel theft can be. However, the challenge for SME (small/medium-sized enterprises) businesses is often not having a dedicated fleet manager to monitor fuel purchases at a granular level constantly, thereby leaving SMEs particularly vulnerable to fuel theft.

My small business lost around $14,000 due to fuel theft. During a routine expense review, I spotted unusual activity on a fuel card. It turned out that a former employee, who had been with the company for over 20 years, had been unauthorizedly using the card for more than a year due to the lack of dedicated personnel to judiciously monitor every daily fuel purchase and the fact that my fuel cards had no AI alerts to monitor unusual activity. 

However, with my background in insurance fraud investigations, I conducted a comprehensive investigation and gathered solid evidence of the theft, but this was a very painstaking and time-consuming process which only increased my financial loss. This evidence led to the conviction of the former employee in court. They were ordered to pay $6,000 in restitution despite the total loss of nearly $14,000.

Detecting fuel fraud is a significant challenge for small and medium-sized businesses, where owners and managers juggle multiple roles. It is almost impossible to detect fuel theft while focusing on running your business. Having experienced this frustration, I aim to help business owners manage their fleets and prevent fuel theft through advice and tools.

How To Protect Your Fleet From Fuel Theft? 

Based on my experience, monitoring fuel usage is essential to prevent theft. To ensure accuracy, it's essential to approach the situation with vigilance and skepticism. Manual periodic checks alone may not be enough to detect misconduct. Conducting regular physical checks of gas cards to make sure they are accounted for and with the proper vehicle or driver can help identify discrepancies at an earlier stage. 

Regular audits and inspections of fuel purchases also help ensure the legitimacy of fuel transactions. Still, again, this is very time-consuming and not the quickest way to detect potential fuel fraud. The best way is for SMEs to implement backend AI analytics that cater to specific usage and operational parameters. These analytics can flag unusual fuel purchases, providing an early warning system for potential theft. Despite the need for investment, fleet fuel tracking solutions are cost-effective compared to the potential losses.

Employee training and awareness are also crucial in preventing fuel theft. Educating drivers and fleet personnel about the consequences of fuel theft and the importance of reporting any suspicious activity can help foster a culture of responsibility and accountability within the organization, discouraging internal theft.

Budget-Friendly Solutions

If you are operating on a tight budget, you can benefit from using a fuel card equipped with backend AI analytics. These cards are customizable to alert when fuel purchases deviate from established parameters. They also help to reduce fuel costs.

For example, consider using the Foss National Fuel and Maintenance card, which costs as little as $5 per month per card. Investing in such preventative measures is minimal compared to the potential losses from theft. This approach prioritizes proactive detection over mere discounts at the pump, offering greater value and peace of mind for businesses.

Final Thoughts

Fuel theft not only causes financial losses but also affects your emotional well-being, leading to frustration and anger. Despite feeling vulnerable in sharing such experiences, I have decided to share my story to help others facing similar issues. 

Apart from my role as a Commercial Fleet Executive at Foss, I also assist SMEs with fuel fraud-related services. I help companies identify the risks in their fuel management system. I can also customize preventive strategies for your fleet management accordingly. You can message me on LinkedIn and follow my LinkedIn article series SME Operational Safeguarding Tips, covering fuel theft, impaired driving and moonlighting if you want to protect your fleet.