What You Need To Know About Background Checks

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Many small businesses think twice about hiring a new employee, especially if that business is going through a rough time.  The actual cost of hiring a new employee is expensive, and not only because of the salary they will be paying.  Recruiting and training alone will be costly, not to mention the time spend for interviewing the possible candidates.  Hiring the right candidate can become quite an ordeal, but by doing background checks on an employee before hiring them can save you time and money in the long run.


 Class Action: Amazon Violates Federal Law With Employee Background Checks

 Amazon.com Inc. and a staffing company that aids the online retailer in its hiring are facing a class action lawsuit, alleging that they have violated federal law because they did not disclose the information found in a background check that was used to deny employment.

Plaintiff Gregory Williams claims in his class action lawsuit filed on Wednesday in Washington state federal court that Amazon and Staff Management Solutions, which is also called SMX, violated the Fair Credit Reporting Act (FCRA).

Williams claims that he applied for a job with Amazon as a “puller” at one of the online retailer’s distribution centers in November 2013. SMX helps Amazon with hiring at its fulfillment centers primarily in anticipation of seasonal hiring.

As part of the application process, Williams also filled out a form giving SMX the authority “to obtain his consumer report for employment purposes.” That form stated that if anything is found in the background check that could affect his employment that he would be given a copy as well as an explanation of his rights under the FCRA. It also stated that the information can be disputed if the applicant deems that it is inaccurate.


Georgia Background Checks: What you need to know

There are a number of ways for employers to gather information on the background of an applicant for employment. Employers may simply call an applicant’s former employer to confirm the applicant’s dates of employment and title and to try to obtain a more detailed reference from a supervisor. However, more and more frequently, employers are hiring third parties to conduct background checks on applicants who have been offered employment. In addition, depending on the nature of the position, employers are requesting reports about an applicant’s driving record, criminal record, and/or credit history. There are often legal limits on employers obtaining and using this type of information. When employers hire a third party to conduct a background check or obtain reports from outside agencies, such reports are subject to the federal Fair Credit Reporting Act (FCRA) and state laws. In Georgia, employers must comply with laws concerning criminal background checks and driver’s record information.


Background Check Industry at a Crossroads: Raising Uptime Standards

Why does uptime matter?

In today’s lightning-paced business climate, companies and organizations in virtually every industry are paying more attention than ever to the speed, efficiency and dependability of the systems, software and other support tools that enable them to serve and retain customers and thrive in an increasingly competitive global economy. It’s an era of Google, Amazon and smartphone-enabled instant gratification, and we expect immediate answers to all of our questions and same-day shipment of every conceivable consumer product. And companies’ system availability, or uptime,makes this all possible.

Companies are also under heightened scrutiny from regulators, and from their own internal auditors, to meet stricter accounting and reporting guidelines, to prepare for every possible disaster scenario that could disrupt their business or their customers’ business, and to operate more efficiently in everything they do. Uptime is at the very core of all these concerns.


Background Checks Should be Standard Operating Procedure

theft (13)It’s not every day that I bring someone new to my team. I’m a regional Loss Prevention Manager and I manage a very small, but highly motivated and productive team. I need someone to work independently, make good business decisions and get results all with very minimal supervision. I also need someone that is of good moral character and has integrity above all else. Normally, when I have an open position, it will take me weeks to fill. I’m extremely selective and always go with the person that I know will fit into my team the best. So running a background check is one of the first things I do when I have a potential candidate, and it should be something you do as well.

It wasn’t all that long ago when I was looking for a market investigator. The position had been posted for a few weeks and I had already interviewed a group of candidates. I had narrowed it down to three and had to make a hiring decision. They all had tons of experience working investigations, retail operations or law enforcement. I knew who I wanted and made a job offer, which was contingent on the successful completion of a background check. We shook hands and he assured me that his record was clean.

A few days later, my background check company sent the results back to me. I was completely taken back. What seemed like a very qualified, motivated person was a complete fraud. His rap sheet was ¼ mile long and he was recently convicted of several counts of fraud. There was absolutely no way I could bring this person onto my team. Had it not been for a solid background check, this person could have potentially cost me and my company thousands of dollars and untold hours of frustration and heartache. This should be a lesson to any owner out there. It doesn’t matter how clean someone appears to be, how well the interview, or even how great their resume may look, there’s always the potential for skeletons to be hiding just below the surface. Do yourself, and your business a favor and always run a background check on new employees. 


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. 


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.”


Controlling Retail Shrinkage by the Numbers

theft (11)The margins in a retail business can be slim.  It doesn’t take much shrinkage for a store to go from the black to the red.  One of the primary roles of a successful store manager is to develop, follow and then tweak a comprehensive security plan.  The creation of an effective plan takes a large investment of time, money and effort.

Managers often have gut feelings about where their losses are, and may even have a good idea about how to control them.  However, few of them understand — and therefore can’t effectively address — the full scope of the problems.  A successful plan starts with knowing the numbers, not indistinct feelings or incomplete ideas.  

The yearly National Retail Security Survey (University of Florida) started in 1991and is considered to be the most accurate and comprehensive in the industry.  The 2014 report estimates that the total shrinkage amount for retail businesses is $44.25 billion.  This is broken down into 5 categories.  The numbers have been rounded and don’t add to 100%.

Employee Theft (41%) – Many managers believe shoplifting is their number 1 shrinkage problem and make the mistake of overlooking this statistic, to their detriment.  Employees will steal time, money and merchandise.  This is regardless of how nice or punitive their supervisor is, good guys get stolen from as much as bad ones do.

Shoplifting (33%) – People steal for a variety of reasons.  With the advent of the Internet (which makes it easier to sell stolen items) and the difficult financial times of the last several years it has been steadily on the increase.  But, it remains consistently second to employee theft, which has also been rising.

Administrative (15%) – This category represents common human error involving administrative tasks, not deliberate fraud.  It includes things such as: miscounting or misplacing stock, money/cash register mistakes, lack of follow through on paperwork and poor record/receipt keeping.

Unknown (7%) – Some researchers view this category as a miscellaneous or catch-all one, where odd or seldom seen circumstances, which don’t fit any other classification, are located.

Vendor Fraud (6%) This is another area of shrinkage that many managers overlook.  They trust their supplier or its representative and ignore all the places (i.e. warehouse, delivery driver, invoices, order forms) where their shipment is shorted “just a few things”.

Before developing a loss prevention security plan it’s vital to understand where the loss is happening.  Then valuable resources, time and money, won’t be wasted on ineffectual systems, training and equipment.  Good managers know their employees, customers and suppliers, and have a feeling about where the problems are.  Great managers know all that too, but they back up their subjective feelings with objective numbers.


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’s conducted over 200 workshops, trainings, presentations, college classes and seminars.  

The Tricks of the Shoplifter

shoplifting4Managing or owning a retail store is not easy.  Shoplifters and employee theft are in some instances a daily occurrence, and the profits you were thinking you were getting have disappear.  The digital age has brought information to the young mind easily and instantaneously, and although some use it for the benefit of their mind, others use it to cause harm and to commit crimes.  Have you checked the videos on Youtube about how to shoplift?  From how to shoplift and not get caught, to instructions on how to prepare before shoplifting.  Yes, your shoplifting prevention team has to be aware of these tactics to be effective apprehending shoplifters.

Follow the links below for more information.


Video:

How To Shoplift Without Getting Caught Using a “Thief Book”


Female shoplifters caught on camera

Several supermarkets have complained that social customs enable women to steal with impunity.

Muhammad Hamouda, sales manager at an electrical accessories company, said 70 percent of thefts in his shop are made by females, primarily stealing women’s accessories.

Most thefts are monitored on closed-circuit TVs, which have also revealed various tricks of these thieves, particularly women with large handbags into which laptops, devices for hair and body care can be concealed. Only female security staff at supermarkets can deal with women thieves.

Hamouda said: “Mostly shops do not complain to police, but demand a written confession with a copy of her identity card, and then let her go free. But there are also shops that make her pay double the price of the article she shoplifted and she is prohibited against stepping inside the shop in future,” he said, adding that some ladies deny the charges and threaten to call the Haia as a means of defense.

Muhammad Asiri, a salesman in Asir, said there were suspicious disappearances of women’s accessories such perfumes, vanity bags and rings, discovered at the end of the month. Guards do not notice anything because the missing articles were mostly light and can be easily hidden. Occasionally there are gangs of women involved in these thefts, Asiri said.


 Confessions of a teenage shoplifter


The Costs of “Wardrobing”

theft (10)According to the National Retail Federation’s annual survey, it is estimated the industry loses approximately $9.1 billion yearly in return fraud.  This includes refunds on merchandising that has been stolen and a practice like “wardrobing” that is costing retailers this incredible amount. Those incidents are done by employees as well as shoppers and shoplifters.  To read more about this topic follow the links below for more information.


NOT-SO-HAPPY RETURNS: RETAIL FEDERATION HIGHLIGHTS “WARDROBING” COSTS

In a new survey, the National Retail Federation says that holiday-return fraud could end up costing stores billions this year. The worst part? This scam is more organized than ever.

The holidays are over, but stores big and small will be dealing with more than the memories.

That’s according to the National Retail Federation (NRF), which reported late last month that during the holiday season alone, retailers could face as much as $3.8 billion in lost revenue from fraudulent returns, an increase from $3.4 billion in 2013 and a big chunk of the estimated $10.9 billion in return fraud in 2014 as a whole.

The organization’s 2014 Return Fraud Survey [PDF], which gathered responses from loss-prevention executives at 60 retailers, shows that retailers suspect that 5.5 percent of holiday returns are fraudulent. And while technology has helped curb illegitimate returns, NRF said, there’s only so much companies can do about retail fraud, which is often suspected to be the work of crime rings.


Eliminate the Practice of Wardrobing in Your Store

Well here’s a new one to me.  The art of wardrobing.  It’s a term coined for shoppers who buy merchandise with the full intent of using it, then returning it for a full refund.  Take a read of the article as the insight is fascinating.

I was astounded to learn that “nearly two-thirds of merchants had items wardrobed in 2007, up from 56 percent the year before, the first year the National Retail Federation (NRF) started tracking the trend,” according to the article.

The term wardrobing was chosen (I’m guessing) because it stems from clothing that’s been purchased, worn and then returned.  But the article points out that wardrobing has taken on a broader meaning and is now applied to any merchandise that’s been used and then returned.

So how big is wardrobing?  The article points out that “Wardrobers want to rent the things they want or need for free, which amounts to fraud, said Richard Hollinger, a criminology professor at the University of Florida who specializes in retail theft. He said return fraud, which includes wardrobing, fake receipts, and other practices, cost retailers an estimated $10.8 billion last year, up from $9.6 billion in 2006.”


RETURN FRAUD COST 9.1 BILLION IN 2013

Criminals trying to get refunds on stolen merchandise and customers engaged in practices like “wardrobing” cost retailers an estimated $9.1 billion in return fraud last year, according to NRF’s annual survey.

“While coverage of this issue paints return fraud as one of the less severe retail crimes, the fact of the matter is that returning used or stolen merchandise — or even using false tender to purchase items — is fraud, period,” NRF vice president for loss prevention Rich Mellor said in a release accompanying the survey. “Efforts to combat fraudulent activity are slowly starting to work, but criminals are becoming more savvy and technologically advanced in their methods.”

The dollar amount of fraud was up 2.8 percent from 2012, but the proportion of returns believed to be fraudulent (3.4 percent) remained the same. During the just-finished holiday season, fraud totaled an estimated $3.4 billion.

Fraud was experienced by virtually all retailers, with stolen merchandise involved in 95 percent of cases. Employee fraud accounted for 93 percent of incidents; 69 percent were returns of items purchased with fraudulent payment like stolen or counterfeit gift cards. Wardrobing — where customers typically purchase a dress for a party or a big-screen television for the Super Bowl and return the item after it has been used — accounted for 62 percent.


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!


Why You Should Always Prosecute a Thief

law-3Throughout the last few years, I’ve encountered and had the chance to network with several small business owners in my community. Most of these encounters were a part of a retail/law enforcement partnership. It always seems that these smaller stores have the same shoplifting problems as the big box retailers, but with one key difference. Those small stores don’t have the sales figures to cushion them from losses. If I compared my store (a large national retailer) to a smaller store in the same shopping center, and that smaller store has even ¼ the loss I see, that could be devastating to their ongoing success. Part of the problem is that smaller stores are less likely to prosecute a shoplifter, which makes them a very soft target.

The case for prosecuting every shoplifter is strong. You can look at every major retailer across the country and they all have large Loss Prevention departments with the goal of prosecuting everyone that steals from them to the fullest extent of the law. Why do they do this, and better yet, why should you? First, it sends a very clear message. You will not tolerate stealing your hard-earned money, and if you come in my store and steal, you will go to jail. Second, it keeps prices low for your customers, and shrink low for you. Finally, if someone steals from you and damages your product, even if you recover it, you’re still at a loss. By prosecuting that shoplifter, you are entitled to recover what has been lost during that particular incident.

It’s important to send a message to shoplifters. Believe me when I tell you that shoplifters share trade secrets. Not only does word travel on the new item to boost, but where the easiest place to steal it is. Shoplifters are like water, they travel the path of least resistance. If they know that the small store up the road won’t call the cops if they are caught, then that’s where they are going. It’s basically a win-win for the thief. They can either come into your store, steal and get away, or they can get caught with no real consequence and be released only to try again. You have to take a stand against their criminal acts and show them that you will not be victimized by their actions. Money:
We all like to boast our low prices. You can’t have a successful business if your prices are significantly higher than your competitors. Well, shoplifting affects your ability to keep prices low. If you are logging loss month, after month, you’re going to have to raise your prices in order to make up for the losses. This may help in the short term, but over time, customers will seek out the best deal for their dollar. Prosecuting a shoplifter keeps that merchandise in your store, it keeps the product available for your customer and it ensures that you stay in the black.

Money: You’re in business to make money. When a shoplifter steals from you, they are taking money out of your pocket, and food off of your family’s table. Let’s imagine a shoplifter steals a pack of steaks from you. Maybe they put the food down their pants, but you catch them at the door and get your steak back. Would you really put that food back out for sale? Probably not. If you didn’t file charges against that shoplifter, he was able to still cause a loss to your store. By prosecuting this individual, you will be able to collect, through the court system, what is rightfully owed to you. You wouldn’t allow someone to come into your home and steal your TV with no consequence, so why let them do it to your business?

Every time I have the chance, I bring up these points to whomever will listen to me. What I see the most is small business owners being afraid to prosecute a thief for various reasons. The most common is the reluctance to go through the judicial process. I know… the wheels of justice turn very slowly these days, but that’s no excuse to let a thief go un-punished. Your business is your life blood, it’s how you feed and provide for your family, so next time you catch that shoplifter stealing your hard earned money, make sure that they are prosecuted to the fullest extent of the law.