June 18, 2025

What to do if an employee uses a company credit card for personal use

When an employee uses a company credit card for personal expenses, it could be a mistake or a deliberate act of misuse. This often happens when employees confuse their personal credit card with their employee credit card, especially during a business trip or while juggling both cards in their wallet.

In either case, it's important to take action to address the situation and implement measures to prevent future misuse. We walk through how to identify and handle misuse of company credit cards, respond appropriately if someone is using a company credit card for personal use, and implement preventive measures to reduce future risk.

Is using a business credit card for personal use illegal?

Using a company credit card for personal spending can cross into illegal territory, particularly if the misuse is intentional. In some cases, it may be classified as fraud or embezzlement, both of which carry serious legal consequences.

If an employee accidentally uses a company card for personal purchases, it may not be a criminal act, especially if they report the charge immediately and reimburse the company. However, even accidental misuse can breach company policy and lead to disciplinary action, especially if it’s not corrected promptly.

Is an employee using a company credit card for personal use considered embezzlement?

Repeated or intentional use of a company card for non-business-related expenses, especially with no effort to reimburse or disclose, can constitute embezzlement.

Under U.S. law, embezzlement involves the unlawful taking or use of funds by someone in a position of trust, and company credit cards fall under that definition. As an employer, you may be within your rights to pursue termination or legal action in such cases.

Don’t ignore any instance of corporate card misuse, whether accidental or deliberate. Addressing the issue promptly, documenting the situation, and enforcing clear policies are critical for protecting your business and maintaining trust.

Potential financial and legal consequences for businesses

When an employee misuses a company credit card, the impact can extend well beyond the individual. Your business could face:

  • Legal exposure: You may need to initiate legal proceedings to recover funds, especially in cases of fraud or embezzlement, which can be costly and time-consuming
  • Tax complications: Misclassified personal expenses can trigger IRS audits or result in the loss of legitimate business deductions, leading to potential penalties or back taxes

Credit damage: If unauthorized charges cause missed payments or overextended credit limits, it can harm your business credit score and potentially your personal credit score if your account has a personal guarantee

Accidental vs. intentional misuse

Accidental misuse typically stems from honest mistakes, like grabbing the wrong credit card, misunderstanding expense categories, or assuming a charge qualifies as business-related. These mistakes are usually one-time occurrences, and you can often resolve them through repayment and a brief policy refresher.

Intentional misuse, however, involves knowingly using a company credit card for personal expenses, like non-business travel or meals unrelated to work.

Your ultimate response should depend on the employee’s intent. Accidental misuse may warrant a warning and clearer communication of your expense policy, while deliberate or repeated misuse could justify formal disciplinary action, termination, or even legal consequences.

Who is responsible for unauthorized charges?

In most cases, your business is initially responsible for paying any charges made on its business credit card accounts, including unauthorized ones. However, whether your business can recover those funds depends on internal policies, employment agreements, and the nature of the charge.

If you discover that an employee used a business card for personal purchases, you may be able to require repayment, but only if it’s supported by your company’s expense policy or employment agreement. Be sure your policy clearly outlines when repayment is required and how to handle it to avoid confusion or legal pushback.

Steps to take if an employee uses a company credit card for personal use

If you discover, or even suspect, an employee has used a business credit card for personal purchases, it’s important to act quickly and follow a consistent process. Here’s a step-by-step guide on how to handle the situation from start to finish:

1. Verify the misuse

Confirm whether the charges were indeed for personal use. This involves reviewing the expense receipts and transaction details. Employees should provide purchase receipts for all card transactions, as outlined in your company’s expense policy. If you find discrepancies, contact the vendors for transaction records to verify the purchases.

2. Understand the circumstances

Engage with the employee to understand the context of the misuse. In some cases, the misuse might be accidental, especially if employees carry their personal and company cards together. Clarifying whether it was an intentional act or a mistake will guide your next steps.

3. Document the incident

Keep thorough records of all findings and communications related to the misuse. Documentation is critical for potential disciplinary actions and to maintain transparency and accountability within the company.

4. Decide what actions to take

Depending on the severity of the misuse and company policies, immediate actions may include:

  • Requiring repayment: Ask the employee to reimburse the company for the personal expenses
  • Disciplinary measures: Issue warnings or take disciplinary action as per company policy; in severe cases, consider termination of employment
  • Legal action: For significant or repeated misuse, you may need to involve legal authorities

5. Review and reinforce expense policies

Revisit your company’s expense policy to ensure it clearly defines permissible uses of company credit cards, the process for reporting and rectifying misuse, and the consequences of policy violations. Ensure all employees are aware of these policies and consider conducting refresher training sessions.

6. Improve monitoring and controls

Implement stronger controls and monitoring mechanisms to prevent future misuse. This can include setting spending limits, requiring preapproval for certain transactions, and using a business expense tracker to get real-time updates and oversight of card usage.

7. Leverage technology

Use corporate card solutions with built-in expense management software that offer real-time tracking and automated approval workflows. These tools can significantly reduce the risk of misuse by providing immediate visibility and control over all transactions.

By taking these steps, you can address incidents of personal use of company credit cards promptly and effectively, safeguarding your company’s financial integrity and promoting a culture of accountability and transparency.

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Best practices to prevent company card misuse

Prevention is always better than damage control. With the right tools and controls in place, you can reduce risk, promote responsible spending, and protect your company’s finances.

Choose business credit cards with built-in controls

Some business credit cards come with built-in expense management tools and spending controls. These controls can include spending limits and approved vendor lists and transaction types, helping to prevent unauthorized expenditures.

Make your expense policy easily accessible

If you have expense management software, directly upload your expense policy to keep guidelines top of mind for employees and reduce excuses for policy violations.

Use virtual cards to further control spending

Virtual cards offer an additional layer of control over business spending. You can issue virtual cards for specific transactions or vendors with predefined limits and expiration dates, making it easier to monitor and restrict spending to only what is necessary for business purposes.

Set custom spending controls with Ramp

Prevent company card misuse before it happens with Ramp. The Ramp Business Credit Card lets you restrict spending by vendor or category, set team-specific permissions, and create approval workflows based on role or dollar amount.

Issue unlimited virtual and physical cards and assign them to specific teams all in one platform. Employees can submit receipts via text, mobile app, or integrations with tools like Gmail and Amazon. We even auto-generate receipts and follow up on the missing ones for you.

Learn more about the Ramp Business Credit Card with an interactive product demo.

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Ali MerciecaFinance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

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