---
title: "Expense fraud"
description: "Expense fraud is claiming reimbursement for fake, inflated, personal or duplicate expenses. The four common schemes, the red flags and how to check a receipt."
canonical: https://engine.com/glossary/expense-fraud
updated: 2026-11-02
author: "Engine Editorial"
---

# Expense fraud

Expense fraud is when an employee claims reimbursement for business expenses that were made up, inflated, personal or already paid.

Also called: expense reimbursement fraud, expense reimbursement scheme, expense report fraud

Updated November 2, 2026 by Engine Editorial

## What is expense fraud?

Expense fraud is an employee getting paid back for expenses that weren't legitimate business costs. This cheat sheet covers how to think about it and the red flags worth checking on hotel receipts. The detail is further down.

### How to think about it

- **Four schemes cover most of it.** The Association of Certified Fraud Examiners names mischaracterized expenses, overstated expenses, fictitious expenses and multiple reimbursements as the four most common.
- **Personal trips get called business.** Comparing expense reports with work schedules can catch it, since the "business trip" often lines up with a vacation or day off.
- **A company card can pay twice.** An employee charges an item to the company card, keeps the receipt and claims it on an expense report as if they paid.
- **Detail makes checking possible.** Detailed expense reports let a company make those comparisons, which helps prevent expense schemes.

### Red flags on a hotel receipt

- **A perfectly round total.** Taxes rarely leave a hotel bill at an even $200.00.
- **Checkout after the work ended.** The job wrapped Friday, but checkout was Sunday with no work planned.
- **Just a total.** Hotel receipts normally show the nightly rate and other fees. A bare total is missing something.
- **One stay, two projects.** The same hotel stay appears on expense reports for more than one job.
- **A rate the hotel won't confirm.** Call the hotel, ask what rate was charged for those dates and compare it with the receipt.

## Types of expense fraud

| Scheme | What happens | Example |
| --- | --- | --- |
| Mischaracterized expenses | A personal cost is claimed as business | A personal trip filed as a business trip, or dinner with a friend listed as business development |
| Overstated expenses | An actual business cost is inflated | A $120 room submitted with a $180 receipt |
| Fictitious expenses | An expense is invented | A hotel stay for a room nobody used |
| Multiple reimbursements | One expense is paid more than once | A company card charge also claimed on an expense report |

## How it works on Engine

[Engine travel policies](https://engine.com/features/travel-policy-enforcement) check lodging, flight and rental-car rules during booking and can block a booking, require a reason or require approval. [Engine reporting](https://engine.com/features/travel-reporting-analytics) lets finance filter booking and billing data by department, project, team or cost code. With [Direct Bill](https://engine.com/features/direct-bill), Engine pays eligible hotels and bills the company on one consolidated invoice.

## Pay hotels directly, skip the receipts

With Engine Direct Bill, Engine pays eligible hotels and bills your company on one consolidated invoice, so travelers never front the room charge. Free to use.

[Get started](https://engine.com/sign-up)

## Questions

### What are the most common types of expense fraud?

Claiming personal costs as business, inflating actual business costs, inventing expenses that never happened and getting reimbursed more than once for the same expense.

### What is the least common expense reimbursement scheme?

Multiple reimbursements, according to the ACFE. Its most frequent form is submitting several types of support for the same expense.

### What should a manager do when an expense looks wrong?

Confirm the rate with the hotel, then pull the employee's full booking history and look for a pattern. A single incident can be an honest mistake, so talk to your own supervisor before talking to the employee.

### How does paying hotels directly reduce expense fraud?

When the company pays the hotel, the traveler never submits a hotel receipt, so there's no hotel receipt to inflate or fake.

## Go deeper

- [How to catch expense report fraud](https://engine.com/blog/expense-report-fraud-detection-prevention)
- [How to audit travel expenses](https://engine.com/blog/how-to-audit-travel-expenses)
- [Expense report](https://engine.com/glossary/expense-report)
- [Engine travel policy enforcement](https://engine.com/features/travel-policy-enforcement)

## Sources

1. Association of Certified Fraud Examiners, "The Fraud Tree: Occupational Fraud and Abuse Classification System," https://www.acfe.com/-/media/files/acfe/pdfs/fraud-tree.ashx, accessed November 2, 2026.
2. Association of Certified Fraud Examiners, "Fraud Risk Exposures and Descriptions," https://www.acfe.com/-/media/files/acfe/pdfs/fraud-risk-tools/7_fraud-risk-exposures-and-description.pdf, accessed November 2, 2026.
3. Engine, "How to Catch Expense Report Fraud Before You Cut the Check," https://engine.com/blog/expense-report-fraud-detection-prevention, accessed November 2, 2026.
4. Engine, "Company Travel Policy Enforcement," https://engine.com/features/travel-policy-enforcement, accessed November 2, 2026.
5. Engine, "Travel Reporting and Analytics," https://engine.com/features/travel-reporting-analytics, accessed November 2, 2026.
6. Engine, "Direct Bill for Company Hotel Travel," https://engine.com/features/direct-bill, accessed November 2, 2026.