Real-Life Experiences in Combating Retail Refund Fraud

Keep a close eye on your registers -- we hear how to find and nail internal thefts and scams


The story: In a regional chain department store, two young workers and their non-employee confederates recently embezzled $7,700 in three weeks through fraudulent refunds of men's suits. These college-age employees passed the suits to their friends when working the cash registers. The friends took the suits back for cash refunds at other stores in the chain. The employees and their accomplices split the proceeds.

The solution: An alert security officer noticed that the two cashiers in question constantly had people at their registers, yet their total sales were low compared to the amounts that other cashiers were ringing up. In addition, the two young workers had a much greater number of credit slips in their drawers because they would exchange the slips brought in by their accomplices for cash from their registers. The security officer looked at surveillance tapes and noticed that the same "customers" appeared over and over at the same registers when the two employees were working. The officer compared the times that the accomplices showed up on the videotapes with the register transactions to establish the pattern of embezzlement.

The advice: Again, the register reports will help you see patterns to refunds that might add up to employee embezzlement. A sure sign that something is up is a much lower or higher rate of sales and/or returns at a particular register or when certain cashiers are working. Alternatively, a complete lack of refunds could also indicate that something is amiss, especially if that is not the norm for the other registers. A refund tracking program is also a valuable tool for managing returns by the same customers and putting a limit on the number of transactions or the dollar amount your store is willing to give an individual customer.

THE CASE OF THE MISSING EARRINGS - help us solve the case!

The story: At a jewelry concession in the middle of a large shopping mall, an entire display case filled with $1,800 worth of gold earrings recently walked away. The employees, who were all high school and college age, were rumored to pass merchandise to their friends constantly. But because the concession is freestanding, with no video surveillance, no one has been able to prove how or when the workers stole the case and/or how they passed it to confederates.

The solution?If you have a solution or advice about how this concession can prove the involvement of the workers or avoid a repeat theft, please let us know by e-mailing your ideas to We'll publish the best solutions in an upcoming Retail Security column. You can also post thoughts on how to solve this in our forums at the following link:

About the author: Liz Martinez is the author of "The Retail Manager's Guide to Crime and Loss Prevention: Protecting Your Business from Theft, Fraud and Violence" (2004, Looseleaf Law), and is a retail security/loss prevention consultant and an instructor at Interboro Institute in New York City. She will be lecturing on "So You Want a Degree in Business Continuity, Security or Emergency Management? Here's How!" at the CPM West conference on business continuity in Las Vegas on May 25, 2005. She will also present retail business continuity case studies at the CPM East conference in November 2005. She can be reached through her website at