Are You Letting Your Employees Steal From You?

July 14, 2014 by Leave a Comment

theft (2)Employee theft is one of the most difficult issues a business owner faces. An employee is 15 times more likely than a non-employee to steal from an employer and they are responsible for approximately 44% of business’s theft losses (National Federation of Independent Business). And yet it’s one of the problems owners and managers are least likely to address.

However, the denial method of management doesn’t work causing nearly a 1/3 of businesses to fail due to employee fraud (U.S. Department of Commerce).  There are many reasons why owners are resistant to addressing the problem of employee theft. Three of these reasons are centered in the owner’s personal beliefs.

I’m a good guy – Some managers simply refuse to consider the idea that their employees would steal from them. They believe “I’m a good guy, so my people will never steal from me”. They misinterpret the issue of employee theft as a personal issue, a referendum on their character, rather than the personnel, business and legal issue that it is.

It’s not that much – Many loss prevention specialists, accountants and business analysts are aware of the open “secret” in many small businesses. Some owners and managers know and don’t care that their employees are stealing. They think, but don’t actually know, the loss is a small amount and for a variety of poorly thought out reasons believe it’s “not worth dealing with”.

There’s nothing I can do about it – These owners or managers don’t want the responsibilities of their jobs. They develop beliefs which permit them, in their minds, to not be held accountable for their managerial duties. For example, they have convinced themselves thatit’s impossible to find good quality workers, so employee theft happens all the time and everyone does it. In this rationalization, there’s nothing the manager can do, so he’s justified in doing nothing.

One of the most important components to any comprehensive loss prevention program is management’s commitment to and involvement in it. Many times business owners can be the biggest obstacle to a successful program due to their erroneous personal beliefs. Regrettably, many have found that ignoring the vital issue of employee theft leads to drastic consequences.

Nicole Abbott – writer, educator and psycho-therapist

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Customer Service Shoplifters To Death

July 1, 2014 by Leave a Comment

theft (12)Yes, it’s true, we sell Checkpoint Systems and Alpha High Theft Solutions. However, equipment is not the total solution to the shoplifting problem. The total solution is a package deal. You have to combine equipment with effective customer service techniques. The retailer who forgets this, stands to spend a lot of money and not fully solve their shoplifting problem. That is one of the reasons we include extensive anti-shoplifting training for our customers (OK that was a shameless plug).

How can you use customer service to prevent shoplifting? Shoplifters must have some privacy to steal. This applies to all shoplifters’ – impulse, amateur and professionals.  Therefore shoplifters tend to shun your attempts to service them. So become even more resolute in your customer service. It is a no loose scenario.  Good customers love customer service. It is one of the reasons they shop with you over a big box store where customer service is someone who knows absolutely nothing about the products. You and your staff do. Lavish the attention on them.

But, and there always seems to be an exception, many shoplifters are just as determined.  So try throwing in a few other customer service techniques.  If you see or suspect that a “customer” has concealed say a blouse, ask them if they would like to see a scarf to go with the blouse. Think about what happens in their mind when you ask this question. A legitimate customer that actually put the blouse back on the rack (and you did not see that) is not thinking about theft. They are experiencing retail therapy.  Their mind will think, “oh I was, am looking at blouses and this retailer is helping me….very cool!”

The shoplifter on the other hand experiences something else completely. They interpret that as you saw them conceal the blouse. In many cases they will simply pull it back out and hand it over. Personally I would try to then insist that they buy it as it does match their eyes, hair color, complexion or even the new shinny bracelets the nice Police Office is happy to supply. I mean, if they wanted it that bad anyway and the fact that we retailers are all those evil money grubbing capitalists then why not get a sale out of it. However, at this point I would think cash is the only payment option I would offer.

The fact is you can use this technique regardless of your type of retail goods. So if this works soooo well Mr. Bregar then why do I need you and that Checkpoint and Alpha stuff? The equipment is there for when your staff to customer ratio is way off during those busy times when you cannot be everywhere. The shoplifters know this. The Checkpoint System, Checkpoint labels and tags and Alpha products take up the slack. They are on duty 24/7. No sick days, time off, vacation, looking the other way…

Would you like a list of customer service anti-shoplifting techniques?  Contact me, Bill Bregar at 1 770 426 0547 and I will be happy to send you one, free of charge, no strings attached. Heck, even the call is toll free so no more excuses or whining. Like an old (sorry Fritz) but very wise boss once told me, just “do it”.

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Omni Channel Retailing

July 1, 2014 by Leave a Comment

theft (11)Omni Channel Retailing is the current long-term direction that retailers are going forth with. It basically is the process of integrating all aspects of a retailer into one accessible unit for customers to shop. This is the current way to combine a brick and mortar location with online sales, social media, distribution, and mobile phone apps. By cohesively allowing customers to shop any location, by any means available, sales are maximized exponentially.

Simply put, a customer can purchase merchandise online, or from their phone by searching your company website. The products available come from your distribution channels, and in stock inventory within any of your stores. A customer has the ability to see what your on hand inventory is, make the appropriate purchase, and then decide how they will get the product. The options are usually pick up in store, deliver to home, or deliver (from the distribution center) to a store of their choice.

Omni Channel Retailing is a viable option, not just for the larger companies with hundreds of selling locations. It is actually a great way for smaller businesses to compete with these big box stores as customers have better access to a wider range of your merchandise, when and where the customer needs it.

Having worked with larger companies just beginning these selling processes, I was able to experience their growing pains first hand. The hardest obstacle to overcome was ensuring the proper on hand inventory, so when a customer placed the order we could quickly fulfill it.

I saw too many unhappy customers place an in store pick up order, show up thirty minutes later, only to find out we didn’t actually have their product in stock. Not only were they put out by the inconvenience of needlessly driving to the store, but also they still had to figure out how to get the merchandise they wanted to buy.

As we progressed with the process, we started taking a better approach to our on hand accuracies. As a result, our sales increased, as did our customer satisfaction. Through Omni Channel Retailing, we were able to reach a whole new customer base and increase our sales in ways we never dreamed we could.

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Same Time Next Week

July 1, 2014 by Leave a Comment

theft (5)Shoplifters are surprisingly creatures of habit. My initial assessment was that a shoplifter, who is desperately trying not to get caught, would work hard to vary the times and days that they would come into a store to steal. I thought they would want to take a surprise approach to their thieving ways. I was actually quite wrong in my assessment.

The truth is most shoplifters want to find a comfort zone to steal in. They are looking for a tried and true way to get in and out of a store undetected. That is why if they steal something and get away with it on the first try, they will continue to use those same methods and manners in their subsequent thefts.

Luckily for us, when a shoplifter develops a pattern, it makes it easier for us to catch them and put a stop to the shrink losses they are creating. By identifying the pattern they created, we can be one step ahead of them and can be waiting to catch them, just like this shoplifter.

I was working for a home improvement store. We started loosing large rolls of electrical wire worth several thousands of dollars. Since these were large, heavy items that were not frequently shuffled around, we set up a camera to see if we could find out where they were going. After a few weeks of watching, we saw that every Friday around noon a man came in, loaded a roll onto a cart and then switched the price tag out for a less expensive one. The cashier charged him for the roll of wire based on this lower priced tag.

Since we found his pattern, we waited until the following Friday. Sure enough he was just like clockwork. Noon came and so did he to walk off with another one of our rolls. This time, we were there to intercept the transaction and have him arrested.

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A Victimless Crime?

July 1, 2014 by Leave a Comment

theft (1)Shoplifting has always been viewed as a victimless crime. It is one of the reasons why shoplifters justify what they are doing. They view their theft as a crime against a faceless company where no one specifically gets hurt. The majority of these shoplifters would never steal from a friend, or commit another kind of home invasion or burglary. That would be violating a specific person, and much harder to morally justify.

When you work retail, you understand just how far from the truth it really is. Shoplifting is not a victimless crime. Its victims are actually frequent and plentiful, starting with the store owners and employees. These are the ones who have to bear the majority of the effects shoplifting has.

To start with, small business owners often do not have the inventory turns needed to effectively diminish the financial impact of stolen merchandise. Unlike companies with thousands of locations that collectively absorb the financial impact of higher cost of goods and lost sales, small businesses rely on their slim profits from maximizing every dollar spent in their stores.

Employees are the next to feel the pains of shoplifting. Hours can be cut, reducing their personal paychecks. Store maintenance, heating and cooling can also be reduced as finances are moved back into inventory replenishment. The overall morale of a store can be reduced, making for an unpleasant place to work.

Customers are the last to feel the brunt of shoplifting, but they still feel it. They are the ones whose time and patience are wasted looking for items the store should have, but doesn’t. They frequently unload their displeasure onto the employees who already have a reduced morale. Customers start taking their sales elsewhere; shopping at stores they can rely on.

Even though a shoplifting crime does not target a specific person, it is by far not a victimless crime.

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The Typical Characteristics of Embezzlers

June 23, 2014 by Leave a Comment

theft (8)The crime of embezzlement is on the rise. There are many reasons for why it’s on the increase. One of the reasons is that business owners and managers don’t envision the embezzler as a potential criminal. The average embezzler doesn’t fit the idea of a stereotypical offender, therefore, supervision becomes lax. This leaves people and situations not monitored as well as they should be.

Embezzlers share more characteristics with the general populace than with other criminals. As a result, it’s important for managers and business owners to understand the profile of the average embezzler. Here are their most typical characteristics.

Age –They’re usually older than other criminals, past 30, and they begin their criminal activity at a much later age. Those who’re classified as major embezzlers often begin in their early 40s. (2011 Marquet Report on Embezzlement).

Family situation – Most are married with traditional family situations. They usually come from intact and stable families of origin.

Education – As a rule, they have higher levels of education than the average criminal.

Race – The majority of perpetrators are white.

Employment/Criminal History – Nearly all of them are first-time offenders with clean employment histories. Over 80% have never been charged with a crime or terminated from a job. (2012 Association of Certified Fraud Examiners Report)

Job Responsibility – It’s estimated that professional and managerial staff commit 40%, clerical, bookkeepers and other employees commit 40% and senior officers and owners commit 20% of embezzlements.

The size of the loss is frequently related to the position the perpetrator holds. The median loss committed by owners/executives is $573,000, by managers $180,000 and by employees $60,000. (2012 Association of Certified Fraud Examiners Report)

Gender – Until recently 70% of embezzlers were older males who’d attained a position of trust and authority, which provided the chance to commit the crime. But, with more women reaching positions of authority and responsibility, the percentage of female embezzlers has increased to 64% in the last several years. However, men on average steal significantly more than women. (2011 Marquet Report on Embezzlement).

Psychological Issues – Embezzlers usually don’t have an antisocial personality, which is much more common in other criminals. However, they do have mental health issues, most notably gambling problems (30%) and depression and/or anxiety, which may be as high as 80%.

It’s human nature to trust those who we perceive as being like us. Unfortunately, there’ll always be people who’ll take advantage of human nature. Managers can better protect their businesses by educating themselves about the typical characteristics of embezzlers.

Nicole Abbott – writer, educator and psycho-therapist

 

 

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Why Employees Steal In Retail Loss Prevention, Atlanta

June 3, 2014 by Leave a Comment

theft (2)Over the 30 plus years the thousands of employees I caught during retail loss prevention theft investigations told me the reasons why they stole from their employers. One of the very most common reasons has been something like: “as a favor to help a friend out”. All of us refer to this as peer pressure. What still amazes me to this day is that an employee commits a serious felony that will potentially cause the loss of their freedom and civil penalties to help someone else out.

Many of us loss prevention and security professionals have heard this same reason over and over so many times. Why do they do it? There are several interesting factors. The main one being their age. We hear this a lot from 16 to 22 year olds. I feel this is because they think that fitting in with these so-called “buddies” is more important to them. That thought process is pretty strange to the rest of us until you think back to your own life when you were at that age. You may have started drinking or did something else that you now look back and say, “What in the world was I thinking?” All of this in order to “be friends”.

People in that age bracket also seem to feel like they are immune and they will not get caught. In that situation I always chuckle about the loss prevention investigations I conducted where a younger employee thought that they were the only one that ever thought of void or refund fraud, cash theft or some other retail theft that I had already put 500 people prior to them in jail for.

One retail loss prevention investigation I conducted is a particularly good example. Two 18 year old employees, female and male who had were girlfriend and boyfriend made the decision to steal cash and merchandise in the thousands of dollars. Their belief was that no one knew what they were doing. They thought that they were smarter that the rest of us including the manager.

The manager contacted me to start a loss prevention investigation after she noticed discrepancies in both merchandise and cash. I put the evidence together and it became very clear that it was the girlfriend/boyfriend. During the interviews with each of them I discovered the reason, they were stealing for each other (isn’t love great?) and they didn’t think anyone else would figure it out. They got to spend the next several years on probation paying back the retailer with interest and many hours of community service. They were put into separate community service programs since the Judge thought their love needed a little break.

Your loss prevention program should take these types of reasons into account if you want to keep your merchandise, assets and cash on YOUR bottom line. Make it clear to ALL employees that you will not tolerate any loss or theft. The only thing they are allowed to leave the store with that they did not bring in is the air in their lungs. The rest does not belong to them.

For more information on loss prevention security, retail loss prevention or loss prevention in general please contact us or call 1.770.426.0547

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Narcissistic Behaviors

June 2, 2014 by Leave a Comment

theft (13)Employee theft is probably one of the hardest forms of theft to detect and resolve. The problem is that these employees have an advantage over you. They know your systems, they know who is observant, and they know when the best times to steal are. Employees also have access to different processes and assets that shoplifters do not have.

An employee who is embezzling money, instead of stealing merchandise, typically will not show indicators that would make you initially suspicious. What we have found over years of investigations and interviews is that these employees do show other behavioral patterns. When combined with certain access to accounts, billing, and cash processing, the behavior should be a red flag to their employers.

The first warning sign is the employee displaying any overtly narcissistic behaviors. The textbook definition is that a narcissistic personality is a person who is excessively preoccupied with personal adequacy, power, prestige and vanity, mentally unable to see the destructive damage they are causing to themselves and to others in the process.

Typically these employees will build themselves, their position and their responsibilities up. They withdraw other employee access to their jobs, saying the other employees simply cannot perform the job functions satisfactorily. The other employees are under qualified, and the employee is the only one who can do the job right.

They will then validate and secure their positions by saying they are the only ones who can do their job. What would you do if I left? No one else can do this, I have to be here. They will often change the way processes are done, or have their own filing system. They will do anything they can to simultaneously confuse anyone who attempts to look in on what they are doing, and validate how complicated their job is; in essence creating their own job security.

What they are actually doing is finding ways to keep everyone else out of their paperwork. If they are embezzling, they are siphoning money by creating false invoices or payments, they can be creating write offs, even when a customer pays in full. They can be floating money from one account to another to cover up the cash they are taking.

The solution is to be wary of any employee who is displaying these narcissistic behaviors. They are building themselves up, while pushing blame onto those around them in an attempt to derail you from becoming suspicious of them. Next, make sure you have a check and balance system in place. There should be a standard way to handle all accounting practices. No one should create their own system. This system should also have a periodic audit to ensure compliance and integrity of your books.

Even though it makes more sense financially to hire only one person to do all of your paperwork and accounting, have a second person split the responsibilities. Accounts payable and accounts receivable (sales, receiving, cash management) functions should be split to lessen the likely hood of an employee embezzling money from you.

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The Last Four Digits

June 2, 2014 by Leave a Comment

theft (10)There have been several well-publicized security breaches lately of some major national retailers. The breaches have been in their credit and debit card payment processing servers. Unknown hackers have been able to extract data that should have been encrypted to prevent unauthorized usage of this credit card data.

Anytime a credit or debit card is used at a cash register, the card machine captures the information on the magnetic strip. From there the information is scrambled about (encrypted) as it is sent to the respective banks to make the actual charge on the payment cards.

It was during the transmission of this encrypted information that hackers were able to capture the actual data, not the encrypted version. This left millions of consumers with compromised credit/ debit card information.

Now that this information is out there, the criminal element has access to it. Many underground websites will offer batches of credit card numbers, expiration dates, and often the verification codes on the backs of the cards. All of this information is sold for the right price.

Once the information is in hand, the criminals can make a new credit card. A typical process is to take a blank credit card and emboss the name (or alias) of the person going to use the card. If a cashier were to check the ID, it would then match.
The stolen information is put onto new magnetic strips, and these strips are put onto the card blank. Since the criminals will use the same card blank with multiple stolen card numbers, a generic credit card number is embossed on the card blank. The magnetic strip is the only thing changed out for each new stolen card number.

Since larger retailers are keeping a more watchful eye out for stolen cards, many criminals are going to smaller business that may not have the same level of security in place, but might carry just as desirable merchandise. To protect your business, the easiest way to verify a legitimate credit card vs. a criminal made stolen card is to verify the last four digits of the card being used.

The actual credit card (the stolen card) information is what your cash register will capture. It is extremely unlikely that the last four digits of the stolen card information will match the last four digits of the credit card number embossed into the card being presented. Any discrepancy in the two numbers should immediately be declined.

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Working On The Ground Level

May 31, 2014 by Leave a Comment

theft (8)In spite of all of my years of experience in catching shoplifters, I am always worried that they will spot me watching them. It’s not that it would be the worst thing that could possibly happen, mind you. More than likely the shoplifter will discard the merchandise before they make any attempts to walk out the door with it. It prevents the loss of product, which is ultimately what retail theft prevention is about.

What I personally don’t like is feeling like I have wasted all the time watching them, and the potential shoplifter leaves without any recourse. That means that they will probably come back in and make another attempt at stealing from my stores.

I spoke with one of my mentors about the concern and he gave me an interesting piece of advice- Get down on the ground to avoid detection. Now he wasn’t talking about sprawling down on the floor and staying there. He was talking about lowering down to avoid being in the shoplifters line of sight.

A shoplifter is trying to avoid detection at all costs. They are maintaining constant vigilance and eyesight towards anyone that comes within their line of sight. As such, they are focused primarily on the movements that are straight ahead, at their eye level.

A shoplifter is not looking down, to see if someone is kneeling down, spying on them. I have since developed my own trick to watching shoplifters closer up. I kneel down beside a table, or a rounder of clothing. So I don’t look suspicious to the shoplifter, or any other customers, I pretend to be tying my shoe. Even if my shoe doesn’t have actual laces on it, if I am fiddling with my shoe, no one is suspicious, and I am below the shoplifter’s line of sight.

Of all the cases I have watched that I have used this trick, not one shoplifter has known that I was watching them from a few feet away. I still feel like I could be noticed at any time, and I guess that feeling will never go away. I do know that my trick has been proven to work for me in the past, and will stay successful in the future.

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