Employee Theft Indicators

Merchandise Pass-through

Situation:

Cashier passes an item into the basket without scanning it through the till as a sale. (This can be done at standard tills, self check-out tills or the customer service desk).

Warning Signs

  • Customer chooses  a  longer cashier line over  a shorter faster one
  • Customer leaves if a certain cashier is not available
  • Shorter sales receipts than the size of the order suggests
  • Cashier who entertains a high number of visitors during working hours
  • Customer singles out and holds out for a particular cashier to return to his/her till
  • Scanned and un-scanned items are mixed-up on  the conveyor belt
  • Shoppers who select unusually large amounts of high value items
  • Cashier slowly scans items individually
  • Signals or acknowledges accomplices in the queue
  • Usually bubbly cashier becomes strict or loses sparkle with a specific customer
  • Cash tendered appears less then amount required for the size of the purchase

Merchandise Theft

Situation:

An employee hides or takes merchandise without paying

Warning signs:

  • A preference to park personal car behind the store or next to the outside bins
  • Seldom takes breaks with colleagues. (This suggests a fear of arousing suspicion or that  others will learn of thefts)
  • Bagged merchandise stacked  next to a till
  • Stashing away goods in the store
  • Shows a preference for inappropriate large work bags
  • Always first in and last to leave
  • Taking goods to and from toilets or changing room
  • Product or packaging found in the vicinity of bins or compactors
  • Discarded empty product packages found in backroom or workstation
  • An eagerness to take out rubbish especially  just before a break or home time

Employee Stealing Cash

Situation:

An employee steals cash

Warning Signs

  • Above normal  use of the ‘no-sales’ key
  • Use of calculator or other counting aids to track cash removed.
  • Frequent refunds
  • Employee who regularly borrows money from colleagues
  • Habitually closes till or cashing up early
  • Unduly straightening or counting money in the till
  • Leaving the till open for long periods after sale
  • Keeping the cash drawer open from one customer sale to the next
  • Cashier holds on to cash and puts it aside instead of in the till
  • Regularly adding coupons into the till (May be removing equal amounts in cash)
  • Employee who appears to live beyond their means

Aiding Shoplifters

Situation:

Employee colludes with shoplifters and alerts them of loss prevention activities

Warning Signs

  • Employee who supplies customers with extra carrier bags
  • Regular visits by family members and friends
  • Employee who assist other dishonest employees or shoplifters
  • Staying clear of management
  • Always on guard against management, loss prevention personnel or other store employees
  • Unjustified interaction with security officers or store detectives

Under-Ringing

Situation:

Cashier regularly marks down selling prices without authorisation

Warning Signs

  • A price discrepancy as multiple items not scanned at the same price
  • Cashier who manually enters instead of scans items
  • Cashier who has access to spare SKU barcode at the till
  • Cashier with a below average customer spend for all periods
  • Items on till records that do not match the items covered in the transaction

Refund Fraud

Situation:

A customer service employee creates a fake customer refund and takes the equivalent in cash from the till.

Warning Signs

  • Customer queries the lack  of a  receipt for a return and refund
  • Valid customer receipts left on the customer service desk or found  in the bin
  • Employee completes refunds under another employee’s till  ID number
  • Employees completing a refund with no customer present
  • Employee completes a refund for a customer without a return of merchandise
  • Employee holds on to customer receipts after a sale
  • Falsified customer details on refund records

Credit Card fraud

Situation(s):

a)      A cashier knowingly uses a stolen or unauthorised credit card as payment

b)      An employee fraudulently refunds to their own or an accomplice’s credit card

Warning Signs

  • Recording a customer’s credit card number
  • Holding  on to the customer’s copy of a credit card receipt
  • Cash and credit totals do not balance
  • Cards taken away from the presence of the customer
  • Signals or acknowledges accomplices in the queue

Fudged Voids

Situation(s):

a) Cashier voids a valid cash sale and takes the equivalent amount in cash

b) Cashier conspires to void items after they are scanned to reduce the total sale; thus facilitating the passing of merchandise.

Warning Sings

  • Voided transactions followed by no-sale
  • Multiple negative transaction
  • Supervisors input sales and sanction their own voids
  • Same day customer receipt discovered at the register or in the bin
  • From time to time a cashier registers sizable overcharges (could not remove a cash)
  • Cashiers with unexplained low scanning percentages
  • Cashiers holds on to customer receipts
  • High cashier usage of counting aids (i.e. paper/pencil, calculator, paper clips)

Cash Office Theft & Fraud

Situation(s):

a) A cash office employee fakes accounting figures thus enabling the removal of cash

b) A cash office employee falsifies company payroll, attendance records or time sheets

Warning Signs

  • Abnormally high or low cashier variance reports
  • Ordinary audits of safe / petty cash reveals cash shortages
  • Bank statements do not tally with deposits recorded at the store level
  • Cash office totals are out of sync with deposit figures
  • Bank finds and reports deposit short
  • Differences in cashier statements are not trailed

Typical Warning Signs

Situation(s):

Managers should be mindful of and clued up to basic warning signs that might signal theft problems.

Warning Signs

  • Employees who constantly monitors the movements of managers or loss prevention personnel
  • Recurring variances match known debts periods
  • An employee expresses concerns  about company policy or charges that managers do not follow set procedures
  • Reluctance to take part in meetings about integrity or theft
  • Noticeable increases in variances before employee holiday or bank holiday weekends
  • An employee leaves without notice or calls in sick in the middle of a  routine oversight or natural audit process
  • Discontentment with the job and/or supervisor
  • Employees oppose re-examination or audit of financial data or records
  • Unusual enquiries into loss prevention coverage hours

How to Reduce or Prevent Employee Theft

Minimizing employee theft requires the organisation to:

  • Develop and follow through positive HR programs that are centered on reasonable compensation, good working environment as well as employee sponsored activities.
  • Back a high profile security program strengthened by a  strict company policy of prosecution
  • Devise and implement secure  procedures for handling merchandise and cash; that leave clear & concise transaction / audit trail
  • Reinforce strong recruitment and selection procedures

Methods to deal with employee theft

  • Pre-employment  screening
  • Conduct  in-depth background and credit checks
  • Undertake a detailed examination of employment history and ensure the references are thoroughly checked

Policies & Procedures

Any effective loss prevention policy should include:

Key/Perimeter Access Control

  • Entry and exit access to store must be tightly controlled
  • The organisation should reserve the right to search employees entering or leaving the store (Including sub-contractors, salesmen and company reps)
  • Maintenance personnel and sub-contractors who have to work within business hours should always be accompanied by security
  • Employees should use only designated entrances to the store
  • Access to the drop-off door, front entry, and emergency exits must be monitored and regulated.
  • Change key and lock combinations periodically (Known to authorised personnel only)
  • Run key count regularly.

Scanning Policy

  • Make the scanning policy part of cashier training
  • Spell out and include essential points in procedures for the manual inputting of barcodes and scanning of items
  • Scanning policies should also provide specific guidelines for using the multiple quantity key

Employee Honesty & Integrity Policy

  • A clearly written statement of the organisations honesty policy should be distributed to all employees
  • Employees  should acknowledge receipt of the policy by signing and returning a copy which will be kept on their personnel file
  • Detailed explanation of the policy should form part of  all new recruits induction and should be periodically discussed to ensure that employees understand the organisation’s perspective on honesty

Employee Shopping Policy

  • This section sets out the times employees are permitted to shop and limits their shopping to periods when they are not working. That is either before or after their scheduled shift or during break.
  • The policy should also state that there will be no priority or preferential treatment for employees outside the normal courtesies offered to customers. Also that staff discount cards should not be used for friends/families shopping – it should only be used for the sole benefit of the employee and at the designated times
  • The policy should also require that receipts be kept with the items at all times
  • Employees should be barred from scanning their own, their friends or families’ shopping.

Void; Refund; No-Sale Policy

  • It is incumbent upon management to explain the policy regarding the processing and approval of negative transactions including void, no-sale, or refund to all employees.
  • As a best practice the organisations should authorize only trained supervisors to conduct this task. Those supervisors should never be allowed to scan their own void transactions, refunds or no-sale.

Hoarding Merchandise;

  • Boxes, packages and discarded bundles of merchandise should be placed in designated locations and constantly monitored

Unofficial Markdown;

  • In the event of a markdown various records must be adjusted to reflect the lower inventory value
  • Discourage employees from creating their own discounts. This can be achieved with frequent inspection. (Employees who desire items at the height of the season and certainly before discounts sometimes create their own price by intentionally damaging products).

Receiving & Shipping Policy

  • Ensure all incoming shipments are physically checked and verified against the accompanying invoice or delivery note.
  • Receipts given to delivery people or receiver should confirm a shipment as complete or record and report shortages found.
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