The Truth About Internal Theft

theft (2)Do you know what small business owners and Loss Prevention professionals have in common? In my career, I have found that there is no other business unit in a retail company more concerned about the financial health of the company than the LP department. Our life goal is to SAVE money, all while finding ways to increase sales and profitability, improve margins and assist in improving operational efficiency. Doesn’t that sound like a savvy business owner to you? Reversely, as a small business owner, you’re plagued by theft. You may also find yourself asking, where is that theft coming from?

If you do some online research, you’ll probably find a ton of sites and quotes that all say internal theft causes more financial damage than external. Well, that’s not entirely true. External theft has steadily been on the rise and causes millions of dollars in loss every year. The same also holds true for internal theft. What these statistics do though, is misrepresent internal theft. Yes, your employees sometimes steal from you, but that doesn’t mean 1 out of every 3 are. What that means is those employees who do engage in theft, are taking you for a LOT more than an average shoplifter. Last year alone, personally, I managed over 650 cases. 540 were shoplifters. The dollar amounts associated with those cases were almost the same in both the internal/external category. 

Take this for example. Last year, I was contacted by some inventory control guys regarding a specific electronic device at a store location. We looked at a store inventory report and it showed that this one sku was showing a negative 600 on hand at this location. By investigating transaction records, we found these units had been refunded to the store over a period of time. Further investigation showed that a single cashier had conducted nearly 600 refunds of this particular sku and was able to pocket nearly $65,000 in cash from ghost refunds. It would take a lot of shoplifters to equal that dollar amount, but this was only ONE employee.

What I want owners and managers to understand is the reality of the internal theft problem. Understand that not all of your employees are thieves, but that 1% that will steal from you, will steal over and over again. As an owner, you should have internal control measures in place that limit your exposure to losses, and at the very least, a descent CCTV to review those losses when they are uncovered. While shrink will always be a part of life in retail, you have the power and the tools to make that financial impact as less as humanly possible.  


Background Checks and Employer Liability

shoplifting7Seems like every time I turn on the news, I hear about another person who walks into their office and starts hurting people. Is this happening more and more, or do we just hear about it more? Do you ever think about those companies and wonder what goes on after something like that happens, or even before? Even more perplexing is a recent airliner crash that seemed to be caused by one of the pilots. Every day, employers around the country have the potential risk for a disgruntled, or mentally unstable employee to cause harm to their staff, or customers. Can you prevent this and if not, how can you limit your liability?

My personal opinion on random acts of violence is that you can never prevent every occurrence. You can definitely limit your exposure to the risk by barring firearms in your workplace, having a no tolerance violence policy and running background checks on all of your employees. This however, will not stop someone that is hell bent against causing harm. Again, my opinion here is that if someone wants to “go postal,” nothing on Earth will stop them. That’s a fact of the world we live in. There are ways to limit liability on your end (as a business owner). 

Take for example the other day. I terminated an employee for performance related behavior. Hours later, another employee came to me with a screen shot of the terminated employee’s social media page. There, was a threat of violence towards the store and myself personally. I immediately contacted the local police. Did I really thing this person was capable of what they were posting on social media? No. Did I see it as a way to blow off steam from being terminated from a job? Absolutely. Then why did I contact law enforcement? The idea that a threat was made forces me to take that approach. Had I shrugged the threat off as “blowing off ;steam” and then 3 hours later I had that former employee burst through the front doors with a firearm, I, and my company could be potentially liable for any injuries due to failure to appropriately react to a known threat; sounds completely crazy, but it’s the truth. 

You can relate this to running background checks on your employees. Let’s say you don’t perform a background check on a new hire and with 2 weeks he loses his temper with a fellow employee and severely injures that employee. Worst case scenario is that employee is no longer able to work. You find out after the incident that your new hire has 15 arrests for domestic violence and other crimes against persons. You could be potentially held liable for creating a violent workplace due to a failure to properly screen applicants. Again, it sounds completely crazy but this has happened and will continue to happen. Background checks are standard practice and every single big box retailer across the country and they should be for you as well. 


How Are You Preventing Shoplifting?

shoplifting5There is always so much debate about how to fight shoplifting in the retail industry.  There are loss prevention teams in all the major retail stores, and the management team at any other store is, if not trained at least aware of what to do when facing a shoplifting accident.  Millions of dollars are lost due to shoplifting, and the matter seems to get bigger every day.  New government policies are making sure shoplifting is punishable accordingly, and retail stores are spending millions of dollars in security and personnel to fight this crime, but why is that not enough?  Follow the links to read more about this and other stories. 


Shoplifting & Loss Prevention: Do We Need A Fresh Look?

Traditional Loss Prevention is not working. If it was working, the retail world would not still be suffering $35 million or more a day in losses. If it was working, retail owners and store directors would not be going through security and loss prevention officers or the security companies they represent like the free samples they often hand out to customers. Security experts and loss prevention companies would not be constantly scrambling for new accounts, or be in conflict with the accounts they service.

Shoplifting is one of the least detected and most unreported crimes. Stock control in many stores is so deficient that few retailers know how many goods they are losing to shoplifters or their own staff. Statistically, so long as shrinkage does not exceed 2-3% of goods sold, retailers pay little attention to shoplifting. There are also financial incentives for managers to increase the bottom line profits. The bonuses they receive are often based on profit margins, and paying for security services can be a drag on profits. Managers are under constant pressure to justify expenses in a corporate world driven by profit.


Shoplifting Prevention: Top 5 Tips

Shoplifting is of major concern to vendors, so much so that it’s considered normal to budget 10-15% in losses due to store theft. This means each honest customer is paying 10-15% more due to the sins of his fellow shoppers. This budget figure can be reduced by one of your company’s most important assets: Your employees. Real, live, people. While we recommend security cameras, computerized security tagging, door security guards, and even undercover security personnel, this article will address how your employees – often the most involved people with your customers – can also be involved in shoplifting prevention. Here is a Top 5 list of suspicious behavior often exhibited by shoplifters, all of which are easily spotted by employees.

      1. Baggy or oversized clothing. There’s reason it’s called “baggy” – shoplifters are using their clothes as veritable bags, stuffing their stolen ware on their person as if it’s part of their wardrobe.
      2. Hands in pockets, or hidden otherwise. A regular shopper has nothing to hide. In contrast, a shoplifter has everything to hide.
      3. Teaming Up. Shoplifters might hang together when planning or passing along stolen items. If you see two or more people in a group speaking in low tones, looking over their shoulders, diverting their eyes, or of course, stuffing their or others’ pockets, it’s a sound suspicion of illicit activity. Regular shoppers, on the other hand, will likely happily chat away at full volume, and keep their non-purchased items in full view.

Japanese organization considers shared biometric database to combat shoplifting     

The National Shoplifting Prevention Organization (NSPO), a nonprofit organization of major Japanese retail businesses, is considering developing a biometric database to share facial recognition data in order to combat shoplifting across Japan, according to a report by The Japan News.

The NSPO said it would consider allowing retail stores to share the facial data with other stores in the same industry or other establishments in the region.

The organization proposes to set up a shared biometric database, and store managers can enter the facial data of shoplifting suspects into said database to continually monitor the suspects as he or she visits other stores.

Many retail stores have been using biometric technology in the past five years, however, the majority establishments that use facial recognition do so without publicly notifying any of their customers.


Employee Theft

theft (4)Employee theft according to the research done by many independent companies, is the number one reason stores across the  country lose profits.  A loss prevention team can help you address the issue and solve it, but most often than not, the theft that is happening in your store can go undetected for many months, or even years before your or your loss prevention team is aware of it.  Training and educating your loss prevention team could save you thousand of dollars every year by making sure they attend workshops or seminars that keep them aware of the happenings of loss prevention every year.

Follow the links below to read more about this topic.


U.S. retail workers are No. 1…in employee theft

Light-fingered employees cost American stores (and consumers) more than shoplifters do.

It’s almost Groundhog Day, but for retailers, the holiday season is finally winding down.

“The four months from October through January are when stores see not just their biggest sales volume of the year, but also the most returns and exchanges,” says Ernie Deyle, a 30-year veteran of the retail loss-prevention wars who leads the business consulting practice at London-based data analytics firm Sysrepublic. “Unfortunately, the same four months account for about half of all annual shrinkage.”

That shrinkage, made up of missing goods from shoplifting and other causes, costs U.S. retailers about $42 billion a year, according to the latest Global Retail Theft Barometer, an annual industry study led by Deyle and inventory management firm Checkpoint Systems.


 What Wal-Mart U.S. Executives Learned By ‘Walking The Store’

I began my career in the grocery business as a bagger. During that time I observed that my boss, and sometimes his boss and some other senior executives, would “walk the store”. These walks provided the opportunity to perform visual inspections to see what was going right and wrong with the store. We all understood that we needed to be on our toes in case someone from headquarters decided to pull a surprise visit. This is exactly what the senior management of Wal-Mart (NYSE: WMT) U.S. recently did.

Eight months ago Greg Foran took over the U.S division of Wal-Mart, which has struggled with hit and miss same store sales ranging from -1.5% to positive 2.4% over the past five years. He and his team decided they were going to make it their top priority to understand the business under their charge and that included store visitations. On Apr. 1, they gave investors a strategic update indicating that Wal-Mart U. S. may be losing its grip in executing some basic common sense retailing principles. Let’s examine.

Empty shelves

One of my bosses in the grocery industry had a saying, “we sell groceries not real estate” in reference to empty shelves, with the underlying implication that shelves need to be full of merchandise so that customers can buy it. Customers aren’t interested in the air above empty shelves. Greg Foran noted some occurrences of empty shelves and full backrooms in some of the stores he visited:


Group steals bags of cash from D.M. stores, police say

A group of thieves distracted employees at four grocery stores over the weekend and stole bags of cash, including $10,000 from one business, police say.

Three females and a male would enter a store and pretend to buy items while distracting employees to another part of the business, security video shows. One of them would then steal from behind the counter or an office.

They robbed La Cruz 3 and El Palomino on East 14th Street and La Favorita on East Grand Avenue on Saturday. Saigon Market on Euclid Avenue was robbed Sunday morning, according to police reports.

“They seem to be targeting mom-and-pop type places. Businesses like QuikTrip and Kum & Go have rules about dropping off cash once they get to a certain amount,” said Sgt. Jason Halifax of Des Moines Police Department. “It may suggest the suspects had prior knowledge of how the businesses handle cash.”


Wardrobing & Returns

Shark Tag DressThere is a new term in the retail dictionary. “Wardrobing” is the process where a customer purchases a piece of your merchandise, uses it one time, then returns it claiming a small flaw or just taking advantage of  your liberal return policy.

We see this especially in clothing such as expensive dresses, prom dresses, shoes and suits. But tools, electronics, beach wear and more can be a target. The problem is hardly new. However, it has always been frustrating. Not only has the retailer experienced a loss  since the merchandise is no longer new but chances are that you or your staff put a considerable amount of time into the initial sales process. Couple that with tight margins and expenses and the problem gets expensive quickly.

Add to this that word will spread. If your store is known as an easy mark for wardrobing, then this kind of shopper will flock to you like metal to a magnet.

The problem is also not just a brick and mortar store problem. In many ways it is worse for online stores. Because it is a faceless transaction, the shopper is more likely to feel comfortable about doing this.

Whether it is right/wrong or illegal, is a side issue. Wardrobing causes Retailers significant losses.

LPSI Shark Tag8  Shark Tag with Return PolicySo how do we fix the wardrobing problem that leads to your returns being higher than they should be? First look at your return policy. Have you dusted it off lately and updated it? Look at the circumstances of accepting returns. Look at the time limits. Is there a restocking fee? Is the customer responsible for shipping on certain items? Look at your competition’s return policies both in store and on-line. Maybe they have solved the problem and the wardrobers are now coming to you. If you would like, I can also be an LP sounding board (at no charge) for your return policy. Just call me, Bill Bregar, at 770-426-7593 x101.

We also offer an excellent fix for wardrobing. The “Shark Tag” by Alpha High Theft solutions basically puts an end to wardrobing. Shark tags are bright tags that mount directly to the merchandise or can be attached via a lanyard. An example could be that the Alpha Shark Tag is placed in a very obvious area such as the bust line (as a guy I would notice it!) of a prom dress. The Shark tag can be removed easily by the customer at home with a pair of ordinary scissors. Once the Shark Tag is removed, your stores policy kicks in. Without the Shark Tag attached, a return is no longer possible.

Also, Shark Tags are VERY inexpensive! If you would like a sample, please contact us.

Remember, you and your staff put a lot of time, effort and expense into your sales efforts. Do not let the thieves or even the wardrobers, rob you of your margins or even your business!


Social Media and Employee Theft

theft (2)There isn’t anything I enjoy more than catching an employee stealing. Whether it be through a lengthy investigation, or through an anonymous tip, it’s very satisfying to me. The idea that you employ someone, put money in their pocket and a chance to succeed, but they steal from you, eats at the pit of my stomach. I can’t stand a thief and to me, it’s even worse when it’s an employee. Throughout my career in Loss Prevention, I’ve handling thousands of employee theft cases. Most don’t really stand out to me, but there are a handful of stories that I like to share when I have the chance.

Social media has really changed the way we communicate and share information. Personally, I rarely watch the 9 O’clock news anymore. I just log into Twitter, or Facebook and see if there is anything relevant to me. No more are our personal communications private. Using social media as a communication device gives the entire world visibility to everything you say, or do. So, if you’re a thief, you should probably know this. 

Recently I was having some issues with shoes in my store. I was constantly finding less expensive brands in the more expensive boxes. I started off finding one or two a month, so I chalked it up to a shipping error from the factory. As the weeks progressed, I began to find more and more, and I quickly realized I had a potential thief. I started running the sales for the cheaper shoes and noticed that one individual had purchased every single pair that I had found. Inside those boxes were no doubt the more expensive shoes, but who was this guy? I hadn’t a clue, and without any good leads, my case went cold. Until one of my employees helped me crack the case. 

I was closing the store one Saturday night and a few hours before closing time, I started making the rounds to make sure everyone was zoning and cleaning up so we could get out at a decent time. I noticed one of my footwear employees on the computer in the manager’s office, so I started walking that way. He noticed I was heading in his direction, so he quickly left the area. A little while later, I went to check sales on that same computer and noticed there was a window still open. It was that employee’s Facebook page. 

I maximized the screen, at first not realizing it was his page. What I saw shocked and amused me all at the same time. The window that opened was his private messages. Out of curiosity, I perused a bit. There, in the open, was a long conversation between my employee and a friend of his. The employee basically taking an order for shoes. My employee described how he would put the shoes in a cheaper pair, where to find them and even what cashier to check out with. I had found my shoe culprit, in the most awesome way possible. I printed out the page and a few days later, after letting his friend buy the stolen shoes, confronted the employee. He admitted to the several thousand dollars’ worth of theft and implicated several others in the store as doing the same. In total, I lost 5 employees. To this day, he has no idea that he led me to himself, and I have no plans on telling him!


ShopliftingTricks You Should Be Aware of For Preventing Shrinkage

shoplifting3

Haven’t you heard in police shows on TV how you have to think like a criminal to catch a criminal?  Well, in shoplifting prevention you have to know the methods these criminals are using to be able to protect your merchandise and your employees.  There are shoplifting rings that are professional and make their living stealing.  They may target a specific store or chain of stores, but they always have a plan and different people working to steal as much as they can without getting caught.  The shoplifting prevention team in your store may not be aware of some of these “methods,” and being aware of them may be the difference between a profitable store or one that is constantly loosing money.  For more news about this topic, follow the links below.


Suspects arrested after aluminum foil used in shoplifting

SNOHOMISH — Money-making schemes are a popular topic of conversation among the criminal community. One such scheme ended in three arrests earlier this month in Snohomish. A group of suspects was accused of working in tandem, using aluminum foil to defeat anti-shoplifting devices.

The trick is widely known among heroin addicts who pilfer goods to support their habit, Police Chief John Flood said. He credited the Nov. 2 bust at the Snohomish Station Kohl’s to increased anti-shoplifting patrols and proactive store security.
Snohomish police started seeing thieves trying the foil ruse about a year ago, Flood said. The crooks wrap bits of foil around the security tags.


Dubai shoplifters’ tricks: Cut magnetic tags

Two Egyptians, who allegedly fled with garments they stole from a shop after removing the magnetic tags, returned after 45 minutes to steal more, the Dubai Criminal Court heard.

AM, 27, truck driver and HS, 28, clerk were noticed roaming around in a well-known store by a security staff.

“I noticed two Arabs roaming around in the shop and kept an eye on them. They picked up a pair of shoes and a T-shirt and one of them entered the trial room while the other waited outside. Then the man came out of the room without the shoes and the garment.

“The two then stepped out of the shop and as the security device did not beep, I thought they had left the T-shirt and the shoes in the room,” the security staff told investigators.

However, the two returned to the shop after 45 minutes and picked up a pair of jeans, a wallet and two pair of shoes.

“One of them entered the dressing room and after they stepped out of the shop, the security gate did not beep this time too. I followed them and caught them near their car while calling police. When asked about the stolen items, they replied that they are in the car,” the security man said.


Retail Profiling Lawsuits: Businesses Would Rather Lose Merchandise Than Detain Potential Shoplifters

SAN FRANCISCO (KPIX 5) — Retailers lose $45 billion dollars annually to theft, about $10 billion of that to shoplifting.

Yet the last thing stores may want to do is catch a thief.

Chris Mcgoey knows all the tricks. He’s been in the loss prevention business for almost 40 years. On an undercover tour of a big box store he showed us how shoplifters stash things and how to pick out what he calls “likely candidates”, like women with big purses in shopping carts. Or shoppers with baby carriers.

Mcgoey admits it’s profiling. “It’s not based on race, religion, sex, age, any of those, it’s really based on behavior.  But he says these days some retailers would rather lose the merchandise than detain anyone. “America is  just shaking in their boots, they are scared. If you stop someone and they haven’t stolen anything you are sued.”

Earlier this year Barneys in New York paid half a million dollars to settle accusations it was singling out minority shoppers. The state launched an investigation after 19-year-old Trayon Christian sued the store for detaining him and questioning his ability to pay for an expensive belt.


The 3 Essentials for a First-rate Loss Prevention Program

shoplifting6It’s never been more profitable to be a shoplifter.  In the past it was difficult to make money from stolen merchandise.  A thief commonly used a third party or “fence” to offload the product.  Fencing was a secretive, high risk job and “average” shoplifters had no way to establish a connection with one.  If they did have one he got a share of the profits, often the biggest cut.

 But, the internet has dramatically changed this process.  It allows shoplifters to function as their own fence.  They’re able to eliminate the middleman and sell directly to, usually, unsuspecting people.  Selling stolen goods is easier, safer and more profitable than ever before.  Therefore, shoplifting is on the rise and, to stay in business, stores have to be diligent when creating a loss prevention program.

There are 3 main essentials needed for a successful loss prevention program.  The 1st and most important is proper store management.  This topic is thoroughly discussed in other articles on this site.  But, while vital, good management goes only so far.  Ultimately, an effective plan also includes 2 other essentials – towers coupled with security labels and hard tags.  

Towers are the 2nd essential piece of a successful security plan.  Checkpoint System is the leading provider of towers.  Checkpoint’s towers are plastic or metal structures and are positioned on both sides of an entrance.  They sound an alarm when an active Checkpoint tag or label, which is attached to the merchandise, passes through them.  Many shoplifters will by-pass a store with towers and, instead, target one without them.

A 3rd essential is hard tags and labels – Checkpoint has many types of each.  Tags are applied to items such as clothing, shoes, and purses; they need a special tool to be removed.  Some tags are filled with ink and will open if not properly removed.  Labels are attached to things like books, DVDs, cosmetics and are deactivated at the point of sale.  When shoplifters see a label or tag, they’ll often move on to merchandise that’s not so well protected.

Making a store a difficult target can keep thieves out of it, which creates a more pleasant, safer environment for employees and shoppers.  Just as importantly, Checkpoint can be the difference between staying in business or closing the doors.  Checkpoint System, coupled with security savvy management, can go a long way towards producing a profitable store.


Nicole Abbott is a writer and psycho-therapist with over 20 years of experience in the fields of mental health and addiction.  She’s an educator, consultant, lecturer, trainer and facilitator, who has conducted over 200 workshops, trainings, presentations, college classes and seminars.

Video Surveillance In Your Store

shoplifting2Surveillance in your store can be a big deterrent for shoplifting and employee theft.  The knowledge that your store is protected, or at least that there are cameras capturing images of employees and customers, can help you save thousand of dollars yearly.  Employee theft is costing the retail industry millions of dollars every year and installing a type of security in your store can help you reduce the shrinkage you are experiencing.

For more about shoplifting, follow the links below.


Surveillance best cure for shoplifting

Aside from the holiday seasons where people aimlessly weave through cart-to-cart traffic down aisles in department or convenience stores, it’s difficult to predict when there will be spike in theft.

Particularly, shoplifting.

As of Friday, the Hutchinson Police Department has worked two cases of shoplifting this month. Granted, only nine unpredictably cold and not-so cold days have scooted by in March. But January and February were hot months for shoplifting with officers responding to 61 combined reported cases of shoplifting, according to Hutchinson Police bulletin archives.

There were 24 reports of shoplifting in December. Numbers from the archive bulletin suggests the shoplifting occurs at three of the most recognizable stores in the city: Wal-Mart, Dillons and various Kwik Shops.

Hastings, Target, J.C. Penney and Kohl’s are also sprinkled on the list of popularly shoplifted stores.

But why the heart-monitor like spike in thefts recently? Police Lt. Martin Robertson isn’t sure of the answer himself.


US based company allows shoplifters to avoid the police by charging them for an online course

IN THE game of Monopoly, there’s nothing better (apart from maybe winning free parking) than turning over that community chest card to see the words “get out of jail free.”

Now imagine that someone hands you that card after you’ve committed a criminal act in real life.

That is essentially what one company based in the United States is doing.

The Corrective Education Company (CEC) is a start-up, and works with businesses to offer shoplifters an alternative path to reform other than the boring old legal system.

Founded by a pair of Harvard graduates, it offers the chance for apprehended shoplifters to pay $411 ($US320) in order to avoid a phone call to the boys in blue.

That money goes towards the cost of attending an online course which is run by CEC that claims to reduce the likelihood of recidivism for the individual.

The obliging shop owners who refer the shoplifters get a cut of about $US40 per offender, and according to Slate around 20,000 offenders have so far coughed up for the program.

That works out to be $7.2 million that CEC has profited by blatantly circumventing the established judicial system.


Walgreens Shoplifting Duo Captured On Surveillance

 


You Can Teach an Old Dog New Tricks…Me

shoplifting1I was recently the Keynote Speaker at a retail conference. The audience was very engaged! As a speaker and trainer I like those situations best.

We had many great questions and comments. But there is one that I continue to think about. Someone mentioned that a way that shoplifters are now discouraging you and your staff from providing customer service is by using a cell phone.

Let’s step back. The first key to preventing shoplifting is the liberal application of customer service. Impulse, armature and professional shoplifters cannot ply their evil trade if your staff is customer servicing them to death.

So now enters the cell phone. If the shoplifter is on a call, real or pretend then we are likely, out of courtesy not to approach them. What a wonderful way to keep us away from them in our own store! This is something I had never considered before. In fact what I have been thinking about is that there are other tools they could use to accomplish the same thing.

Listening to music with a head set on, talking on a two-way radio as if it is work related or how about being busy with electronic tablet or phone with email. Again any situation they can create to keep us at arm’s length.

However, there is a well-established solution to this. All of these techniques fall under the category of distraction or diversion. The solution to this tactic is simply MORE customer service.

Those actions by a “customer” are at a minimum rude. It is also a red flag that you should now pay attention to. Being in your store, taking your time and resources and being on the phone is rude. But we do not want to respond in kind. Instead apply an even more generous application of customer service.

Stay with them, keep your eye on them and make sure they know it. A legitimate customer will feel it and get off the phone, device…. The shoplifter will have a different reaction. They will get frustrated. You are frustrating their efforts to obtain a bit of privacy so they can conceal your merchandise.

Frustrating a shoplifter is our goal. Drive them crazy and send them on their way hopefully never to be seen again, at least by you!

You can reach Bill Bregar at 770-426-7593 x101 or at [email protected]. Bill has over 35 years of experience in the Loss Prevention industry. He has personally investigated over 2300 employees for theft and dealt with shoplifting all the way from his days of apprehending shoplifters as a store detective to the development of policy and procedure for several major retail chains in the role of Director of Loss Prevention.