CHARLOTTE, N.C. - Some watchdogs and even more government insiders worry the Carolinas may be too cozy with Bank of America.
Both states’ employees use BofA purchasing cards to buy things with tax dollars. Now, South Carolina tax refund checks come in the form of BofA-branded cards, unless the taxpayer specifically asks for a check.
Activist Erica Smiley, who works with the group Jobs With Justice, is worried the Carolinas are too tight with the banking giant.
“It definitely raises concerns for me; makes me question their interest. Where are they making money at the end of the day? And is it on the backs of the public sector? Is it on the backs of the taxpayers?” she asked.
She’s not the only person concerned about the tight relationship between BofA and state governments.
Two current, high-ranking state employees said they are afraid the cards make it too easy for state workers to spend tax dollars on themselves. One even said if workers want to get away with stealing from a state, steal from his.
Both states use the purchasing cards, but South Carolina uses theirs more, charging almost $280 million last year.
The South Carolina Legislative Audit Council did a formal review of the program about 18 months ago and found numerous examples of misuse.
The state is supposed to block the cards from being used at certain vendors, including liquor stores, but found that thousands of the cards issued to state employees did not have those limitations.
Employees spent thousands of dollars on gift cards they should not have.
While the state limits how much employees can charge on any one item, the council found workers splitting transactions to avoid the rules. Apparently, 36 percent of state agencies had to discipline employees.
Almost half of state agencies in South Carolina -- 43 percent -- had to make employees pay back tax dollars.
In North Carolina, however, officials said they were “not aware of any losses since the beginning of the program.”
University of North Carolina-Charlotte professor Denis Arnold said that while Bank of America and the states may look chummy, it’s not necessarily a bad thing -- as long as there are protections in place for taxpayers.
“That’s important in any business that the state does. We don’t want any fraud, so those safeguards have to be in place,” Arnold said.
Both states said they have safeguards, including monitoring of card usage and fraud detection software that catches suspicious charges.
South Carolina said its Materials Management Office and the state auditor both review purchasing card use. The state also puts blocks on cards, restricting purchases from some types of merchants.
The states said overall, the BofA cards are easier, more efficient and save tax dollars.
For example, South Carolina’s comptroller said the cards save about $70 per transaction. The comptroller also said Bank of America gives South Carolina a percentage back each year. Most recently, the bank paid out $3.7 million to the state.
Bank of America will not say what it gets out of the relationship with state governments.
A spokesman responded by email, saying, “Fraud risk in a corporate card environment is considerably lower than in the consumer card market. Our corporate card clients have transaction and spending limit controls, merchant controls and daily web-based transaction reporting to help them monitor usage in their card programs.”