Federal Workers Splurge on Gym Memberships, Hairdos on the Government's Dime

After reports indicating federal employees are improperly using government credit cards to buy unauthorized gym memberships and gift cards, and even to get their hair done, two House members have asked the Government Accountability Office to audit the way these cards are used.

Reps. John Mica (R-Fla.) and Gerry Connolly (D-Va.) asked GAO on Wednesday to update its 2008 audit, which found millions of dollars worth of fraudulent spending by federal employees, and called on federal agencies to tighten up those rules.

Rep. John Mica (R-Fla.) is asking the Government Accountability Office to audit the way government workers use credit cards, after several years worth of reports of waste, fraud and abuse.
Photo credit: Rep. John Mica

But despite those recommendations, several inspector general offices have released reports in the last few years indicating that a sizable percentage of the millions of dollars spent each year on credit cards are fraudulent or unapproved purchases. The two members said that while there are limits to what people can buy on a charge card, thousands of small, fraudulent purchases can add up to real money.

"Although micro purchases are capped at $3,000 per transaction, such purchases can easily… add up to billions of dollars if not properly managed," Mica and Connolly wrote. "Federal government managers across the board need to ensure that… departments and agencies are guarding against potential abuses."

The two members reviewed some recent examples of the fraudulent purchasing practices of federal workers at a Tuesday hearing. Janet Kasper of the Environmental Protection Agency's Office of Inspector General testified that in a 2012 review of 80 transactions, 75 of them were not in compliance with EPA policy.

Those 75 transactions amounted to nearly $80,000 of purchases that were "prohibited, improper and erroneous purchases." In one example, two EPA employees bought gym memberships for their families using government cards. The EPA estimates a fraud rate as high as 50 percent.

In another case, employees violated an EPA policy that allows them to buy light refreshments for award recognition ceremonies. But in one case, an employee didn't buy coffee, tea, bagels and fruit, and instead splurged on "four different appetizers, chicken tenderloin, fresh fruit, pasta salad, cookies, soft drinks and punch."

Mica used the hearing to question Anne Richards, assistant inspector general for audits at the Department of Homeland Security, about the Coast Guard's purchase of $12,000 worth of coffee at a Starbucks in California last year. Richards testified that some of these purchases may have been legitimate.

"The majority of those purchases were to furnish coffee for the dining pantries on board cutters, for when they were operating at sea," Richards said. "Some of the purchases seem to be a legitimate use of the card to supply the kitchens or galleys on board ships."

Another witness, Elliot Lewis of the Department of Labor's Office of Inspector General, noted an April audit that would "at least $900,000" worth of government funds were wasted on a student job training program.

Job Corps is a training program for at-risk youth, and it provides these students with pre-paid cards for certain expenses. But in the last few years, investigators have found examples of people using cards for personal uses like hair salons, clothing stores and even buying tickets and other products online.

"Records showed the Miami center had ordered hundreds of cards since 2011, but relatively few were actually used for student travel," he said. Lewis estimated that about 35 percent of the cards issued were used for improper purchases.

Read the House letter asking for a GAO audit here: