Even More Real-Life Experiences in Combating Retail Refund Fraud

Keep a close eye on your registers -- in part 2 of this series, we hear how to find and nail internal thefts and scams


Last month's column (click here to find it) presented case studies of internal theft and provided solutions and advice for other retailers to avoid being victimized in the same way. Because internal theft is the most pervasive loss problem in the retail industry, this month's column takes a continuing look at the schemes employees concoct to defraud stores of money and/or merchandise.

In the previous column, we also presented "The Case of the Missing Earrings" as an opportunity for readers to help solve the case. We received tons of responses, and as promised, we are sharing the best ones in this column.

If you didn't get a chance to write in last month, please see "The Case of the Gang Members' Girlfriends" below. We're looking for the best solutions to this case of internal theft via e-mail, so please send in your thoughts to Liz via email. As an added bonus, the person who submits the best idea will receive a complimentary copy of the book "The Retail Manager's Guide to Crime and Loss Prevention: Protecting Your Business from Theft, Fraud and Violence" (2004, Looseleaf Law) by Liz Martinez. (If your solution is published, we can use your name, or you can remain anonymous. It's your choice.)

THE CASE OF THE MISSING EARRINGS: YOUR SOLUTIONS

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.

Solution No. 1: First of all, you have to conduct background checks on your employees. Then, if an incident does occur, notify the local police. If it's kids who are stealing, they'll probably give it up at the first sign of a uniformed officer. Another strategy to prevent thefts is to shift up the schedules on the kids so that they don't know too far in advance when they're working. That way, they can't plan thefts with their friends in advance. -- Greg Henricks, security manager, Mall of America, Bloomington, MN

Solution No. 2: Who has a key? When was the last time the lock was re-keyed? You have to ask these questions to narrow down the thief. Also, you need to have a camera at the point of sale, recording what's happening at the register to deter fraud. I'd advise this kiosk owner or manager to conduct more inventories during the day and to count what's in the cabinets. Whoever is working is accountable for what's there and for what's missing. And of course, better background checks are needed. Don't do any quick hires, regardless of how desperate you might be to have someone start working. -- Bob Harrison, security director, Allied Security for Mall of Louisiana

Solution No. 3: You have to pin down the time of the loss by reviewing the video. If it's been rumored that thefts have been occurring for a while, I'd have to ask: What has the owner or manager done about them? Inventory control from one shift to the next would be one way to stop the problem. But it sounds like nobody's watching this store. Keep in mind, the owner or manager is paying the employees to work, so look at the patterns of each employee's sales and refunds, then figure out the value of their continued employment. -- Sgt. Jeff Schwiesow, Bloomington (MN) Police Dept., Mall of America Unit

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