Tearing at the fabric of your business: employee fraud in the apparel sector

The detectors beep at the store doors. Store personnel check the customer’s bags: they discover that someone has accidentally left a security tag on a piece of clothing. Your business is safe this time – the system worked, and possible shoplifting was averted. But despite this, there are other threats at play right inside your store.

Research shows that dishonest employee theft ranks ahead of customer shoplifting as the number one cause of shrinkage globally. And it’s been estimated that as much as 60-80% of internal theft is happening at the cash register.

As examples – there’s the Sunshine Coast retail chain employee who defrauded her employer to the tune of over $83,000 in just ten months through over 135 transactions. Or the Blacktown service station worker who was convicted of stealing $63,000 worth of lotto tickets. And these are just two recent cases published in the media where the perpetrator was caught.

Playing the disloyalty card

Voids, discounts and refunds are some of the most common ways apparel retailers lose out on revenue to dishonest employees. But there are many other ways dishonest store workers can cause loss to your business.

Misuse of customer loyalty cards is becoming increasingly prevalent, whereby an employee scans a substitute loyalty card when a customer does not have their own – dishonestly receiving the financial or other benefits for themselves in the process. A creative staff member may also pursue various POS tricks such as negative transactions, repeated small EFTPOS payments or manager impersonation in order to mask fraudulent activity.

Not to mention when a customer buys an item of clothing, only to have the cashier later edit the transaction to change the dollar value of the sale – all to steal the cash handed over by the buyer.

It’s a lot to monitor while still watching out for the ever-present external threat of customer shoplifting and managing all other aspects of the business. As a result, it often takes months, or even years – if at all – before many employee frauds are detected, leaving your retail business open to massive cumulative revenue losses.

What if there was a better way?

Retail Defender monitors all of the most common fraud scenarios in the apparel sector, plus many that are less commonly monitored – including identifying hard to catch misbehaviour like loyalty card misuse, and where stock count data is available, shrinkage.

The solution makes the gathering of transaction histories, benchmarking across stores/employees and analysis of evidence much easier and faster. Critically, it does so while eliminating reliance on IT for information gathering. By shifting fraud detection practices from something that takes place based on “gut-feel” investigations to a platform that automatically monitors every transaction every day, Retail Defender not only enhances the speed and coverage of fraud detection but also acts as a strong deterrent. This in turn reduces the likelihood of fraud taking place as employees become aware of the system’s existence (if you choose to announce this).

If you’d put up a security sensor at the entrance/exit of your store to deter and detect shoplifters, why wouldn’t you add one to your internal systems? If you think it’s time to get on top of lost revenue and re-gain control of your business, try a comprehensive loss prevention solution.

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