A Babyccino too far: Reducing employee fraud risk for Food and Beverage Retailers

A miniature drink for babies (minus the caffeine), the Babyccino is a popular, but niche drink at the best of times. So when they started selling like hotcakes from one location of a Sydney cafe chain, it raised some eyebrows. Could it be that there was an influx of coffee-hungry toddlers coming to the store, or maybe the local community had developed a taste for tiny shots of frothed milk? Let’s just say it seemed unlikely.

As it turned out, the Babyccino boom indicated something more sinister than roaring demand for baby-sized drinks: a perceived loophole exploited by employees to defraud the company of revenue. A pattern that was detected jumping from one employee to another, then one store to another – a common course of events, highlighting the contagion effect of fraud.

How did they do it?

By transacting legitimate sales as low value items, with the Babyccino racket, just $1 was charged for what did not turn out to be a Babyccino at all, but in fact a slew of higher value items.

Creative deception

Low value transactions are just one of the creative methods employees can use to steal from your organisation in the food and beverage industry. Charge a customer full price and ring it up as something else, stealing the difference once the unwitting customer has left.

How can this type of scam be uncovered?

Bistech’s Retail Defender platform analyses every point of sale transaction for patterns and trends that may indicate a high-risk or fraudulent activity, training deficiencies or operational inefficiency. The most suspicious stores, employees and scenarios bubble to the surface on intuitive monitoring dashboards, ready for investigation by drilling into trends comparisons and transactions.

Most incidents of employee theft occur at the point of sale, and yet, in the usual course of events, these sorts of irregularities are usually only identified and investigated thanks to ‘gut feel’ suspicions. By the time an investigation is initiated, the fraudulent activity may have been taking place for some time, with significant losses incurred.

Meanwhile, once an investigation is determined to be appropriate, manual data extract and analysis processes often mean an investigation can take weeks or months to conclude, further compounding losses. In the meantime, word spreads of this potential loophole.

Fumbling fraud? Regain control

Whether your Loss Prevention strategy is non-existent, based on gut-feel and manual investigations or on basic reports for voids, discounts and refunds, a better solution is available. Retail Defender automatically monitors point of sale (POS) transactions, includes many built-in scenarios and can be easily expanded as new scenarios emerge. With less resources, you can investigate more, and lose less.

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