Pilot Flying J Suffers $400K Monthly Fraud Loss in California

SACRAMENTO, Calif. -- Credit card fraud at many travel centers throughout the state of California costs Pilot Flying J approximately $400,000 per month, Mitch Steenrod, the company's chief financial officer, said in a recent interview.

Steenrod added that the "California legislature" is responsible for the losses Pilot Flying J incurs. "A sophisticated credit card fraud operation is exploiting Pilot's insistence on following state law," Knoxville, Tenn.-based Pilot's CFO told The Mountain Enterprise He added that Pilot has suffered a $400,000 monthly loss for about two years because credit card companies reimburse the cardholder for fraud by deducting the payments from the vendor that accepts the card.

A major problem with California law is that it prohibits Pilot from asking for ZIP codes at outdoor pumps, Steenrod told the news outlet. Since fraud is so prevalent at gas pumps, customers are often asked to enter their ZIP code, with the assumption that thieves would not have information. If the wrong ZIP code is used, service is denied.

"California is the only state out of 46 in which we operate where [fraud] is happening," the CFO told the news source. "And Pilot is the chain that is being hit, because we are following the law…California's legislature is pretty messed up."

According to The Mountain Enterprise, a 2010 California Supreme Court ruling determined that requesting ZIP codes for credit card purchases violated privacy provisions in California's Song-Beverly Credit Card Act. However, the newspaper added that on Oct. 9, 2011, Gov. Jerry Brown signed Assembly Bill 1219, which in fact makes it legal to require ZIP codes at outside, point-of-sale gas pumps. The law went into effect immediately.

Therefore, the news outlet states is it now legal for Pilot to require ZIP codes at the pump.

Pilot Flying J operates more than 600 locations throughout North America.