The Government approved a policy at BP petrol stations allowing beneficiaries to misuse their Work and Income (WINZ) Payment Cards to buy cigarettes, Lotto tickets and other banned items, Newshub can reveal.
Under Ministry of Social Development (MSD) rules, WINZ cards can only be used to buy approved items like food, petrol or clothing, while purchases of alcohol, cigarettes, vouchers, Lotto tickets and electronics are expressly prohibited.
But Newshub has learned the MSD signed off on a BP policy in December 2019 that lets beneficiaries buy items they hadn't been approved for.
BP says it adopted the policy because it was concerned about staff being abused when cards were declined or misused.
The MSD confirmed it sanctioned the move because BP had threatened to stop accepting WINZ cards, leaving them in a situation where some beneficiaries "might not be able to get petrol in situations of urgent need".
BP told Newshub it's committed to finding a better solution going forward, with MSD carrying out a review into its IT and payment systems.
'I'm incensed this is allowed to happen'
Newshub learned of the controversial policy after a BP employee in Wainuiomata revealed the company's national office had sent a memo informing staff to stop vetting purchases made on WINZ cards.
They believed the memo had been sent to all staff at 93 BP Connect stores nationwide.
They also supplied receipts to Newshub of beneficiaries who'd bought unapproved items with their WINZ cards, such as tobacco products, vouchers and gift cards.
It's not the first time a petrol chain has allowed beneficiaries to buy banned items on WINZ cards. In 2017, Z Energy staff in Hamilton were warned after workers let card-holders purchase gift cards that were then used to buy cigarettes.
The MSD at that time said it would take any fraudulent use of WINZ cards seriously.
The BP Connect employee Newshub spoke to said the company's head office was making staff turn a blind eye to something that is "clearly wrong".
"This misuse is a weekly occurrence at our store," they told Newshub. "As a taxpayer and an employee of BP I am incensed that this is being allowed to happen."
In response to a Newshub enquiry, the MSD pointed out that while WINZ card use occasionally comes at a cost to the taxpayer, beneficiaries have to pay back funds loaded onto the cards in "the very great majority of cases".
"Funds loaded on to payment cards for petrol are an advance payment of their benefit. Repayments are then set up to begin deducting out of their benefit," explained George Van Ooyen, group general manager for client service support.
"Payments are not approved for everyday petrol expenses but for urgent or unforeseen costs, such as attending a funeral or tangi, or being stranded away from where they usually live.
"Less commonly, we may also approve petrol grants for people in their first two weeks of work if they need help with the cost of getting to work. These don't have to be paid back."
Why the MSD agreed to the BP policy
BP told Newshub it had decided to stop vetting purchases made on WINZ cards because it could no longer guarantee its "number one priority" - the safety of customers and staff - was being met.
"The Ministry of Social Development is supportive of our team members currently accepting a WINZ Payment Card for all purchases given the safety concerns this issue was causing," a spokesperson said.
"We made this decision following consultation with the Ministry as some customers were abusive towards our team members when WINZ payment card purchases were declined or being misused."
The spokesperson said BP is in contact with the MSD to "develop a better system and process" on the use of WINZ cards. The MSD says it's reviewing its payment and IT systems.
Van Ooyen said BP had approached the MSD in December 2019 to warn that its stores would no longer be enforcing the use of payment card money exclusively on petrol.
"They told us that if we required them to continue enforcing use of the cards on petrol, then they would no longer accept the payment cards," he said.
"We were faced with the situation that some clients might not be able to get petrol in situations of urgent need. As a result we agreed to BP's proposal."
The MSD says this arrangement is not in place with any retailer other than BP.
Van Ooyen says retailers are generally helpful in ensuring funds are spent only on approved items.
Where the MSD is made aware of businesses allowing the cards to be used wrongly, he says "we can and do discontinue use of those suppliers" and can also investigate and prosecute beneficiaries who misuse funds.