BNUMBER:  B-270423
DATE:  July 1, 1996
TITLE:  Department of Transportation-Inspector General-Bonus Points
for Use of Personal Credit Cards for Certain Official Travel
Expenses

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Matter of:Department of Transportation-Inspector General-Bonus Points 
          for Use of Personal Credit Cards for Certain Official Travel 
          Expenses

File:     B-270423

Date:July 1, 1996

DIGEST

Government employees using personal credit cards to charge lodging and 
rental car expenses incident to official travel are not precluded 
under current regulations from retaining for personal use frequent 
flyer mileage points earned on the amounts charged to such credit 
cards, provided that the use of such cards for such expenses is 
consistent with agency guidance and does not increase the costs to the 
government.  Under applicable federal regulation, individual agencies 
have discretion to place additional requirements for employee use of 
agency-furnished cards for official travel, and by implication may 
also place further limitations on employee use of personal credit 
cards for charging expenses of official travel.

DECISION

By letter of October 25, 1995, the Inspector General (IG), Department 
of Transportation, asks whether, and under what circumstances, a 
government employee may use a personal credit card to charge lodging 
and automobile rental costs incurred on official business and thereby 
accumulate bonus points for the employee's personal use.  The IG 
states that her question arises because of an apparent conflict 
between our holding in Discover Charge Cards, B-236219, May 4, 1990, 
and a statement made in a footnote in Panama Canal Commission, 
B-257525, Nov. 30, 1994. 

Although the IG did not specify the particular credit card involved, 
we assume it is one of the "affinity" cards now in wide use.  Those 
involved here, as we understand it, are standard credit cards (e.g., 
MasterCard, VISA) issued by a bank under arrangement with an airline 
or hotel chain, which in turn awards bonus or mileage points under a 
frequent traveler program based on amounts charged using the card 
(e.g., an award of a bonus mile for each dollar charged).  Points are 
awarded for any purchase charged on the card, and are not limited to 
purchases of the services of the particular airline or hotel 
affiliated with the card.  Points or miles awarded in this manner, 
based on aggregate amounts charged on the affinity card, are separate 
from, and in addition to, any points or miles awarded for flying on an 
affiliated airline or for using an affiliated hotel's services, the 
costs of which may be charged on the same affinity card.

The general rule is that a federal employee is required to account for 
any gift, gratuity, or benefit received from private sources incident 
to the performance of official duty, and any payments tendered to the 
employee are viewed as having been received on behalf of the 
government.  See 63 Comp. Gen. 229 (1984), and decisions cited 
therein.  Therefore, an employee may not retain any bonus or gift 
coupon or similar item of value received from a commercial air carrier 
on the basis of purchase of an airline ticket to be used for official 
travel.  Id.  Bonus travel entitlements received by an employee 
through accumulation of frequent flyer mileage credits earned on 
government travel are considered to be the property of the government 
and may not be retained by the employee.  Id.  See also, Johnny Clark, 
B-215826, Jan. 23, 1985, applying these rules to bonus lodging points 
received for using a motel while on government travel.  The Federal 
Travel Regulation (FTR), 41 C.F.R.  sec.  301-1.103, in essence, restates 
these rules.[1]

As the IG recognizes, in Discover Charge Cards, supra, we held that 
the rules set out above do not apply to a cash or credit rebate an 
employee receives from a credit card company based on all purchases he 
or she makes during a year using the credit card, including official 
travel expenses charged to the card.  The rebate in these 
circumstances is distinguishable from such promotional benefits as 
half-fare coupons and bonus points which are directly related to the 
official travel for which the benefits are received, i.e., awarded 
incident to the purchase of an airline ticket for official travel.  
The use of the personal credit card in the course of official travel 
is a matter of personal convenience not directly related to the 
official travel, and the choice of payment mechanism is purely 
personal on the part of the employee, consistent with applicable 
regulations governing official travel, provided for in the FTR.  See 
Richard E. Stuart, 72 Comp. Gen. 251 (1993).

The Panama Canal Commission decision cited by the IG as in conflict 
with Discover Charge Cards dealt with the problem of establishing 
ownership of frequent flyer credits an employee receives incident to 
purchase of tickets for personal use when they are commingled in the 
same airline frequent flyer account with credits received for travel 
on official business.  We held that, if adequate records clearly 
distinguish mileage credits earned on personal travel from those 
obtained from official travel, employees would be free to make use of 
those personal mileage credits.  Footnote 3, which gives rise to the 
IG's concern, states:  

     "We also recognize that employees may earn mileage credits by 
     using certain credit cards for personal purchases or by other 
     means.  The same rule applies to these credits, i.e., the 
     employee may keep those credits for personal use if he or she has 
     adequate records to show that they were derived from personal 
     funds."

This statement was not intended to conflict with the holding in the 
Discover Charge Cards case.  It was intended as a recognition that 
frequent flyer credits earned as a direct result of purchase of an 
airline ticket for official business may be commingled in the same 
frequent flyer account with credits earned by use of an affinity 
credit card.  For affinity credit card credits resulting from purchase 
of tickets for personal travel to be usable by the employee for 
personal travel, he or she must keep adequate records to distinguish 
them from the credits in the account that are earned as a direct 
result of tickets purchased for official business.  The statement was 
not intended to imply anything about the general rule regarding 
benefits received by an employee from purchases incident to the 
conduct of official business.  

In the circumstances presented here, where the employee on official 
business uses his or her credit card to charge lodging or rental car 
expenses and thereby earns frequent flyer bonus points, those points 
derive from the use of the personal credit card, regardless of the 
type of purchase charged to the card, as was the case with the rebate 
or credit in the Discover Charge Cards case.[2]  As stated therein, if 
the use of a personal credit card for purchases on official business 
is not contrary to applicable travel regulations, the choice of this 
method of payment is purely personal on the employee's part, and the 
benefits and expenses that accrue to the employee as a result of use 
of the personal credit card are the employee's, not the government's.

You also asked the extent to which an employee is permitted to use a 
personal charge card for official travel.  As to regulatory provisions 
governing the use of personal credit cards for the expenses incurred 
on official travel, FTR Part 301-10 prescribes the various payment 
methods acceptable for procuring common carrier transportation (which 
is not at issue in this case), and other necessities (such as the 
lodging and automobile rental expenses in this case), including in 
various circumstances, government travel requests, agency-issued 
credit cards, cash, personal checks, and personal credit cards.  FTR 
Part 301-10 states that as a general policy, employees traveling on 
official business are responsible for meeting their current travel 
expenses (and may later seek reimbursement of allowable expenses) but 
that an employee should not have to pay official travel expenses 
entirely from personal funds unless the employee has elected not to 
use government-provided access to funds, such as through an 
agency-issued credit card.  While the regulations do not describe the 
circumstances permitting an employee to use his personal credit card 
for lodging, automobile rental, and various other travel expenses, 
they place strict limits on employee use of personal credit card for 
procuring common carrier transportation, including airfare (FTR Part 
301-10 and the Federal Property Management Regulations, 41 C.F.R. 
Subpart 101-41.20).  Note that subsection 101-41.203-2(c)(2) provides 
that travelers shall not be reimbursed for nonemergency use of cash 
(which includes personal credit cards) for procuring passenger 
transportation in most instances unless written approval is granted by 
the General Services Administration.

Further guidance on the question you pose is found in FTR Part 301-15, 
Subpart C, which prescribes policies and procedures governing the use 
of the General Services Administration's travel and transportation 
expense payment system, including the use of agency-furnished, 
contractor-issued charge cards for official travel.  FTR  sec.  
301-15.44(b) provides that participating agencies shall determine and 
name employees who may be issued such charge cards.  FTR  sec.  
301-15.44(c) provides that such charge cards shall be used only to 
charge expenses incurred in conjunction with official travel or to 
obtain authorized ATM cash withdrawals, and the employee "shall use 
the charge card to pay for official travel expenses to the maximum 
extent possible."  However, these provisions offer no further guidance 
on when an employee may use a personal credit card rather than one 
furnished by the employing agency.

Within the parameters of these provisions, the individual agencies  
have discretion to place additional requirements on employees' use of 
such agency-issued cards and could require, for example, that they be 
used by those to whom they are issued to cover all official travel 
expenses.   One reason for such a requirement is the fact that 
agencies may receive rebates from the credit card issuer based upon 
the total amount charged by its employees.  However, unless current 
agency regulation specifically precludes the use of a personal credit 
card to cover the expenditures for lodging or car rental in this case, 
we see no basis to withhold reimbursement to the employee for the 
expenditures in question, assuming they were otherwise appropriate.

Robert P. Murphy
General Counsel

1. See also Federal Property Management Regulations, 41 C.F.R.  sec.  
101-25.103-2, to the same effect.  In addition, regulations 
promulgated by the Office of Government Ethics state that frequent 
flyer benefits earned on the basis of government-financed travel 
belong to the agency rather than the employee.  5 C.F.R.  sec.  
2635.203(7), note.  Also, section 6008, Public Law 103-355, Oct. 13, 
1994, 108 Stat. 3367, directs the Administrator of the General 
Services Administration (GSA) to issue guidelines to ensure that 
agencies promote, encourage, and facilitate the use of frequent 
traveler programs offered by airlines, hotels, and car rental vendors 
by federal employees who engage in official air travel, for the 
purpose of realizing to the maximum extent practicable cost savings 
for official travel; and the act further provides that awards granted 
under such a frequent traveler program accrued through official travel 
shall be used only for official travel.  However, neither the act nor 
GSA Bulletin FTR 17, Oct. 24, 1995, providing the required guidelines 
to agencies, makes reference to points awarded to the employee for the 
use of a personal affinity card. 

2. The factor which distinguishes this case and the Discover Charge 
Cards case from others is the source of the benefit, here the general 
use of the personal credit card, as opposed to any particular 
purchase, whether or not directly related to official travel.