A Hamilton City Council credit card was used to make fraudulent purchases from Furniture City, an online gambling outlet, 2 Degrees, and an Auckland hotel to the tune of $1711.
The discrepancies were picked up by council staff just five days later and have since been refunded by BNZ through their disputed transactions process.
Council's Audit and Risk Committee discussed the investigation of the fraudulent transactions behind closed doors on Tuesday.
Council's general manager corporate David Bryant said an internal investigation found the cardholder was unaware of the situation until spotting the unusual transactions.
"They responded quickly and effectively to cancel the card and escalate the issue," said Mr Bryant.
"The internal investigation found they were not involved in the fraud and I'm proud of how my staff responded when they identified the unusual card transactions."
Mr Bryant said all of the purchases were made without the actual card.
"It is suspected that the card details were accessed through data mining online. The internal investigation has identified that no staff members are involved and there is no suspicion that the card holder is involved."
The matter has been reported to the police who were investigating.
Police have told the council it was "extremely unlikely that the card was accessed at the council or involves council staff or contractors".
Mr Bryant said the fact that the suspicious transactions were picked up in the organisation's accounting system means their financial systems are working.
The unauthorised purchases took place between June 9 and 11 and showed up in the accounting system within five days. The staff member escalated the issue when it was seen on June 16.
Mr Bryant said the matter was dealt with in the public excluded part of the meeting because the report included various pieces of information including CCTV images of faces and licence plate numbers.
"Until the police complete their investigation and possible conviction, it is not appropriate to release this information to the public domain."