How Trucking is Fighting Fuel Card Fraud — And What You Can Do

Fraudsters are increasingly targeting commercial fuel cards and fueling transactions. Whether driven by growth in the freight market during the Covid-19 pandemic providing more targets and more fueling opportunities or the high price of diesel offering a more lucrative theft opportunity, fuel card fraud attempts have risen drastically.

It seems destined to stay at high levels unless companies fight back. They are doing so, in several ways.

How Bad is the Fuel Card Fraud Problem in Trucking?

Milo Dubak, CEO of Chicago-based fleet Pure Freight Lines, says fuel fraud has always been out there, but it increased tremendously in recent years.

“It was weekly, monthly. It was getting pretty bad,” he says.

For Pure Freight Lines, fuel fraud cost was running $4,000 to $5,000 a month, rising as high as $15,000 to $20,000 one month but dropping to $2,000 the next month. There was great variability in theft volume, frequency, and location.

“With any kind of card, fraud has been happening in some shape or form since fuel cards or credit cards came into being,” says Hemant Banavar, head of financial products for fleet management technology provider Motive. “However, especially in the last few years, fuel card fraud has been on the rise.”

Card skimming across the credit card industry as a whole grew about 70% year over year from 2022 to 2023, Banavar says. That includes all card transactions, not just commercial fuel cards.

He describes the fuel theft problem as “a silent epidemic that continues to grow.”

Fuel Card Fraud: A Silent Epidemic

When Motive surveyed more than 100 trucking industry leaders, about half of those surveyed reported that fuel fraud totals about 5% of their fuel spend. Motive also compiled data that confirmed the fraud and theft trend is on that scale.

Fuel, he says, is the second largest spend for most trucking companies, about 35%, so 5% of that expense being fraudulent is noteworthy.

“They know it's happening, but they can't see that it is happening,” he says. “So, it's really hard for them to do anything about it to prevent it. They’re trying to guess and trying to address some pieces of it through pulling data from many different sources, so it's a really hard problem for them to actually solve.”

Tim Hampton believes the main reason for the increase in skimming fraud is the price of diesel. He is general manager for the over-the-road division of Wex, a payment platform for fuel and fleets.

“Back in March of 2022, when the [Russia-Ukraine] war started, diesel prices jumped well over $6 a gallon in many locations,” Hampton says. “So, it became extremely valuable to fraudsters at that point.”

Fuel fraud reached levels Hampton says he has not seen in his 30-year career. Even with his and other companies' tactics to block the thefts, the number of attempts continues to remain extremely high. These are not small transactions. A typical fuel transaction for a trucking company is $400, $500, or $600, Hampton says.

Ryan Droege, CEO and co-founder of digital fleet payment technology provider Relay Payments, points out that once a fraudster skims and replicates a card, he or she will tend to get away with about three fill-ups. With current diesel prices and most fuel-ups around 100 gallons, that means a thief usually manages around three purchases of around $450 each before they are stopped.

How Fuel Card Fraudsters Work

Fuel card fraud tends to fit into one of two main categories: third-party fraud and friendly fraud.

In third-party fraud, fraudsters install card skimmers at fueling locations that capture data from a card’s magnetic strip so that it can be replicated or cloned. That allows for the unauthorized purchase of fuel until the card is blocked once flagged as being compromised.

Card skimmers on a pump are often hard to spot and have been known to fit perfectly, Droege points out.

The skimming device reads the magnetic card strip data, which is unencrypted when a fuel card is swiped. The skimmer may be transmitting data to a nearby fraudster. Or the thieves may return later and remove the skimmer, now filled with fuel card numbers and relevant data.

“It's very easy for them to then go manufacture and print. They're just encoding a blank card with your card number,” Droege explains. “Once the number’s stolen, they will move as fast as possible to get as much out as possible.”

Banavar says, “It’s almost like fraud as a service. Fraud rings essentially operate out of truck stops, where they know fuel cards are an easier target than an EMV card, a consumer card.”

Fuel Card Fraud is Often Organized Theft

In fact, Al Norris, executive vice president of Commercial Fueling Network (CFN)/Pacific Pride, says much of the fraud and theft is driven by organized crime.

Hampton says most truck-filling locations do not rely on chipped, or EMV-enabled, cards. These replace the magnetic stripe on the back of the card with a more secure data-storage technology. (EMV is short for Europay, Mastercard and Visa, the companies that created the chip standard.)

“Fuel cards are typically becoming more of a target than a consumer-based chip card that you would use at the front of the store, or inside of the store,” he explains.

Often a trucking company will only find the theft later, such as when reviewing expenses at the end of the month, Banavar says. That’s where a solution such as Motive’s can help by bringing data insights to a fleet sooner.

Once the fuel card has been compromised, how does the thief get the value out of it?

Droege says they dispose of it pretty quickly. They might pump fuel into a tank and sell from there. Or they might advertise they are selling fuel at 50 cents on the dollar and instruct someone to meet them at a location and then use the card for the purchase.

Friendly fraud, when a driver or employee steals fuel or uses a card for unapproved purchases, can be one of the hardest types of fuel card fraud for companies to catch, Banavar says. It can create awkward situations when employers worry they may be accusing a good employee who may or may not have stolen the fuel.

“A lot of times the driver or the employee is essentially misusing the card in some way or the other,” he says. “For example, they filled up diesel, but maybe out of the 100 gallons that they pumped, 50 gallons went to the company truck, and the other 50 they either sold or they just filled up their personal vehicle.”

Broader Impact of Fuel Card Fraud on Trucking Fleets

The impact of fuel card fraud on trucking is more than just the funds lost through fraudulent transactions. There is a ripple effect on multiple departments when fraud occurs.

“It just creates a domino effect all across the board,” says Dubak.

When Pure Freight Lines was in the thick of fighting fuel card fraud, it took hours from management, accounting, the safety team, and everyone involved in the office to see where the truck’s route and location were for comparison to the theft locations. Plus, determining who would cover the loss was not quick and easy, according to Dubak.

Fuel fraud also causes disruption for both drivers and the movement of cargo alike. As Hampton says, “Time is money in trucking. We want to prevent fraud as much as possible, and our real goal is not to disrupt that driver.”

Tapping into Technology to Prevent Fuel Card Fraud

The ongoing battle against fuel fraud is mostly over for Dubak and Pure Freight Lines. He turned to a company providing technology that keeps fuel cards and apps blocked for use by anyone other than the authorized user.

He says you can’t fully educate a driver on what to look for, since skimmers are hard to spot and they never know where the fraudsters are or will be next.

“The biggest thing for us was finding the right partners with the right technology,” Dubak says. “It worked out great for us from all aspects, from not having to have fuel cards being shipped and not losing those. We’re having everything digital, to digital receipts.”

Dubak’s fleet also did an API integration connection with its transportation management software, and he says that worked out “phenomenal.” As soon as a driver starts fueling, the information feeds directly into the TMS.

Pure Freight Lines partnered with Relay Payments, an all-electronic payment network built for the trucking and transportation space.

“We take a fully digital approach,” explains Relay Payments’ Droege, “It's much more difficult for anybody to steal or skim a card number — because there isn't a card number.”

The driver authenticates, using facial identification, touch identification, or a PIN code, to access his or her phone and the app. Then they receive a code that allows them to fuel for a specific amount at a specific location. There is no card at all. The driver keys all the information in at the pump.

“So if anybody were to skim it or steal it, by the time they’ve actually got it, the number’s no longer any good,” Droege says. “You can't go and use it anywhere else. It's a very short-lived token.”

Commercial Fueling Network (CFN) and Pacific Pride are the two largest private branded cardlock networks in the U.S., says Norris. Their cardlocks require drivers to enter specific information, which can now be done via a cardless payment app that launched last year.

Ditching the Plastic

“We've transferred all of that over to the mobile payment app whereby you sit in the cab of your vehicle, and you answer all those questions. You say, ‘I'm at dispenser 4, here’s my driver number, here's my odometer reading, job number’ or whatever, and then dispenser 4 is activated,” explains Norris.

He said some fleets have been somewhat reluctant to make the conversion to the app, but they’re seeing advantages of the driver authorizing the transaction from within the truck rather than at a card reader.

Hampton said Wex provides more than 20 prompts a company can use for real-time authorization for a driver to use a fuel card at the point of sale. That data, entered by the driver, is input as part of a closed-loop proprietary network and must be validated. The company also uses a dynamic PIN, such as a trip number or other number a fleet may choose to use.

In all these cases, those dynamic prompts and PINs mean if someone steals, skims, or reproduces a card, it cannot be used by anyone other than the appropriate driver.

“Wex has now partnered with multiple truck stop chains to allow our card to be embedded in their app,” Hampton notes. “Their apps produce a virtual code that’s unique for each fueling. So, we do have a good portion of all of our transactions that are taking place without a piece of plastic being present.”

Using Telematics to Prevent Fuel Fraud

With the rise of telematics and fuel card providers fighting against fraudsters and theft, the two worlds now overlap to drive even more security measures for fleets.

Secure Fuel, which Wex initially sold to its customers, is now provided free of charge. It takes a real-time latitude and longitude reading from the truck and matches it to where the card is being scanned. The geographic information must match for the transaction to be allowed. Fleets allow Wex to access telematics data.

“If it’s not a match, we decline the transaction,” Hampton says.

The onboard telematics data also includes the fuel level in the tank, before and after fueling.

Motive likewise harnesses the power of telematics to better monitor and authorize fuel transactions, analyzing the number of gallons bought compared to the gallons that were added to a truck’s fuel tank. If a driver pays for 100 gallons but only 80 gallons flow into the tank, a fleet can be alerted that 20 gallons of purchased fuel have been diverted.

Banavar says a lot of customers were already using Motive telematics when the fuel card was launched about two years ago, and many are transitioning to that “single pane of glass” approach to monitor fuel transactions.

What's the Answer to Stopping Fuel Card Fraud?

There’s no single best answer for how trucking companies can prevent fuel card fraud. But, as software integration continues to prevail in the industry, fleets and fuel card providers will increasingly gain more visibility into what is happening at the pumps.

Prompts, one-time PINs, and other pre-qualifiers will continue to place roadblocks in the paths of would-be fraudsters. But trucking companies need to do their due diligence both in requiring these security steps and closely monitoring for suspected fraudulent activity.

But a key takeaway from any conversation on fuel card fraud might be as simple as what Dubak found at Pure Freight Lines. A fleet must find a fuel purchasing provider that best meets its specific security needs.