Sometimes you can’t figure it out fast enough. Any time you are working an employee theft investigation the clock is running. The longer it takes to build your case, the more shrink you will incur. The scope of your employee theft may go from just a few dollars to thousands seemingly overnight.

I had a case where I just knew in my gut that a few employees were stealing from us. It started after I saw a few suspicious returns on an employee. She purchased some clothes and later returned them. Company policy was to have a return slip and a check in with loss prevention prior to any employee returns being done.

I had never seen the clothes come back to the store. I asked her why she didn’t get a pass and she stated that she forgot. Well over the next few months I noticed that she was returning almost every item she purchased, never getting a return slip from my department.  It was time to start compiling some surveillance for the employee theft investigation to help my case along.

I discovered that she always had the same associate do her returns. I then started looking at his accounts. He was having a large number of returns to his account, starting shortly after hers did. My case of employee theft had just doubled!

Well, after I started to mirror their schedules, I noticed that items were being rung up and taken out of the store. They weren’t having someone check their purchases, and I noticed the bags were rather large for the purchase.

As it turns out, the employees were in it together. They were making purchases and adding items to their bags. They would then bring the receipts in and credit their accounts. It was a double loss, but we were able to stop it before they got any other employees in on the scam.

For more information on employee theft , employee theft investigation or internal theft  contact us or call 1.770.426.0547 – Atlanta Georgia

Internal theft is an all too common problem.  It happens within every business and takes on so many forms that it rarely occurs in the same manner twice in a row.  That’s because one expects that when an associate is caught committing some sort of internal theft the rest of the staff would take note of what NOT to do in order to avoid the same fate as their former coworker.

Sometimes they aren’t paying attention to what’s happening around them though.

At one of my store’s auto centers there was an auto center technician who was terminated at the end of an employee theft investigation that found he was stealing garage equipment and supplies for use in his own ‘side jobs’.  It was such a big deal that cashiers in the main store, people who generally don’t even know anyone working in the auto center, were talking about it for weeks.  Then, just last Tuesday, I was driving past the auto center garage while going into work and noticed something immensely suspicious and all too familiar.

There was an auto center technician standing behind his car loading several items into his trunk including a few large boxes.  By the time I reached the camera room the technician had already finished loading his vehicle so I went about my shift with one monitor focused on the car in the event he returned to it.  A few hours later, as the auto center closed for the night, the technician pulled his car into the garage and parked it in front of his work station, which was located right beneath a PTZ camera.  Over the next few minutes he loaded even more items into his vehicle, including a large quantity of garage supplies.  It was a blatant, slam-dunk case of employee theft.

His only reasoning was that he didn’t think we would keep watching after we caught the last guy.

For more information on employee theft , employee theft investigation or internal contact us or call 1.770.426.0547 – Atlanta Georgia

Many small box retailers find themselves centering their full attention on shoplifting as their main cause of inventory loss. This is a very dangerous thought process that can lead to a business crumbling. Internal theft is the largest cause of inventory loss period. I worked for, at the time, a small retailer which sold video and PC games. The business has grown exponentially since then and I have to believe that their success in part was because of their ability to change the overall thought process of how shrink occurs.

When I first started I was brought into the corporate office as a loss prevention administrator. I was dumbfounded to learn that my boss, the director of loss prevention had not one bit of loss prevention experience. In fact she told me that she was a store manager before being promoted into the Director position. My job duties were limited to reviewing daily store paperwork and pulling credit card slips for chargeback disputes (when a customer disputes a charge the retailer has to show a copy of a signed/imprinted credit card slip to win the dispute). There was no talk of employee theft investigation; in fact it wasn’t until my second week on the job until I heard anyone mention internal theft. That conversation was troubling since my boss was telling district managers on a conference call that employee theft is so minimal in the company that they should instead focus on anti shoplifting methods to control their losses.

This lead to many district managers scratching their heads but they pushed forward using ideas given by my boss. They “gutted” all their inventory, placing the games in locked drawers behind the register as well as in the stockroom. This process took the stores about two months to implement. My boss had even suggested to the district managers that once the product was secured they could cut back on their daily inventory counts since the losses would most assuredly stop. District managers who brought up the idea of conducting employee theft investigations were met with indifference. There most definitely was a slight improvement in inventory loss in some locations, however in many locations and areas of the country not only did the losses not stop, they shot through the roof.

Employees were given the access to the product in the stockroom, they had keys to the lockable cases, the product was already gutted and easily concealed, there were no bag checks conducted at the store level. Employee theft ran rampant and my boss was clueless. Fortunately I had made a few friends in the inventory control department as well as sales audit and started some employee theft investigations to nail down some of the larger internal theft cases. I was able to work closely with the district managers sharing loss trends, having them do surveillances and then surprise bag checks which ended up catching a few real time employee theft cases. I was able to successfully phone interview the suspects’ real time and obtain large dollar admissions which translated to prosecution and restitution. After about ten of these cases my boss left her position with no notice. To this day I have no idea where she went but it took at least two years for us to put together a real loss prevention team and to gain the respect of the operations sales team. Once the focus was put on employee theft as a primary cause of loss and district managers were properly trained to aid in employee theft investigations were able to cut the company’s shrink by half, which surpassed anyone’s expectations.

For more information on employee theft , employee theft investigation or internal contact us or call 1.770.426.0547 – Atlanta Georgia

 

When it comes to detecting theft, some of your best leads can come from your employee base. You can only do so much to detect employee theft on your own. With your employees being on the front lines, they are one of your best ways of detecting theft. You can encourage associates to provide tips by providing anonymous ways of reporting internal theft. Anonymous drop boxes, hotlines, websites and mailables are great resources you can utilize. Another great way to encourage your employees to call out suspicious behaviors in their fellow associates is to provide them with a reward if their tip should lead to the identification of employee theft. The best way to encourage an open and honest environment is to maintain an atmosphere of confidentiality. When your employees know that they can come to you and what they share is strictly between you and them, they will be much more likely to inform you of employee theft they observe.

Recently my atmosphere of confidentiality was compromised by a member of my team. One of the store employees informed us of internal theft activity where another employee was ticket switching to purchase clothing at a cheaper price. Through our employee theft investigation we identified that the dishonest employee was switching tickets on merchandise and even stealing merchandise. After closing our employee theft investigation we rewarded the informant and promised them confidentiality. When the confidentiality agreement was broken we jeopardized the employee’s reputation with the other employees. Not only that, but we potentially compromised our ability to receive information about employee theft activity from that employee and other employees in the future. Now we will need to regain the trust of our employees and work even harder to ensure they feel that they can come to us and their information will remain classified.

For more information on employee theft, employee theft investigation or internal contact us or call 1.770.426.0547 – Atlanta Georgia

Many years ago, I heard this tale of employee theft when I had just started with a new company. I was working for a retailer that had night stocking. There was a small crew and a manager. They worked a typical Monday through Friday shift about 10 PM to 6 AM.

The store had been suffering some strange losses in high dollar products. These high dollar items were big, bulky and extremely heavy. They were also kept under lock and key 24 hours a day. The Loss Prevention team was beside themselves trying to figure out what was going on.

After countless hours of digging through receiving reports and cross checking invoices, there was only one conclusion they could see. This was an internal theft situation. The only problem was they didn’t know who to start their employee theft investigation on.

In a seemingly unrelated issue, they noticed things being moved in their office. Papers would be slid aside on the desk, or pens would be missing. So the LPs installed a night sensitive camera in the office.

It wasn’t long before they saw the night manager come into the LP office in the middle of the night. He shoved the papers aside, and threw his feet up on their desk.  Low and behold, this manager then pulled out a pipe and started to smoke (and it wasn’t tobacco).

Well, this was just the beginning. After the LPs opened their employee theft investigation on this manager, all the pieces started to fit. They watched as the manager would open the doors at night and roll the merchandise out to a waiting truck. As it turns out, the manager was trading stolen store merchandise for drugs.

This manager confessed to tens of thousands of dollars in losses. He also confessed to a drug habit that he had been in rehab previously for, and was battling again. Without the covert camera installed, it would have been a long road to discovering the source of the losses in this employee theft case.

For more information on employee theft , employee theft investigation or internal contact us or call 1.770.426.0547 – Atlanta Georgia

Conducting employee theft investigations can be a very tedious process especially for small to mid box retailers that do not have in-store loss prevention personnel. Most small to mid box retailers have field loss prevention employees that cover multiple locations and might office out of one store but they do not spend a lot of time in any one location. It then falls upon field loss prevention and operations management to utilize sales performance, inventory reports and store audits to uncover any type of internal theft that may be occurring.

Employee theft is hands down the highest source of loss in retail. In most small box retailers their high end product is not “live” on the sales-floor which pushes the internal theft percentage to an even high ratio. In these stores there is usually no more than five to eight employees on staff, if you have one employee stealing then roughly 1/5th of your store’s work force is committing employee theft. That is a scary revelation that should give any business owner the sense of urgency to have the best tools and people available to conduct employee theft investigations.

In smaller locations it is tempting to conduct an investigation that merely focuses on one or maybe two employees as a result of a report that may indicate they are the guilty party. When dealing with employee theft in this type of setting it is important to conduct an employee theft investigation with patience and persistence. The investigation must involve every employee in the store as well as every type of theft. There might be one or two people committing product theft however another employee might be conducting refund fraud and yet another may be conducting employee discount fraud. If you only address one of the issues the other theft will stop for a while and then continue unfettered once the employee theft investigation has ended. It is also imperative to note and address all performance issues, not just the internal theft. Poor performance can lead to theft.

It can be hard to watch theft occur while conducting a thorough employee theft investigation but when you are finished all performance and theft issues will be dealt with thus giving you a clean store to rebuild.

For more information on employee theft, employee theft investigation or internal contact us or call 1.770.426.0547 – Atlanta Georgia

The title itself led to one of the largest internal theft cases I have ever taken in a small box electronics retailer. One of the most frustrating things any executive can encounter is when money is spent on tools and training and the employees completely ignore them. One of those tools that many retailers have is the ability to track daily cash shortages. In fact many retailers have the capability to track the shortages to the exact register and employee. This is no easy task; it is a combination of technology and register handling policies that allow a business to track not only the overall daily cash shortages but to also track each employee’s cash shortages. The reason for this is two fold, one it will potentially catch employee theft and two it will pinpoint training opportunities for those having difficulties handling transactions. The company I worked for had a great way to track the cash shortages down to the employee which allowed loss prevention and district sales managers’ easy access to audit any potential internal theft trends.

A disturbing trend I began to notice in several stores was the “give a penny, take a penny” slush fund. I would conduct a loss prevention audit and when I came to the cash handling part of the audit I would review the cash shortages for the past quarter. A red flag would immediately go up when there were no cash shortages or overages at all. At that point I would go on the hunt for the “cup” or “dish” of change that ultimately was being used to cover losses or overages in the store. The management always viewed it at a minor issue saying “what does it matter if we were short a bit of change any way?? What’s a penny?” I would then have to sit down and counsel the staff on the pitfalls of covering even the smallest of losses.

I would start with “the case” example which began with a store bleeding massive amounts of product. Since this retailer’s losses were mostly a result (about 75%) of employee theft we knew it was more than likely an internal job. We began our employee theft investigation by auditing daily and weekly inventory counts as well as the over/short cash logs. We were attempting to narrow the focus of the employee theft investigation to ascertain how the product was leaving the store as well as who was responsible. We had to stop the bleeding as well as pinpoint the thief before they realized we were on to them. One thing this store manager made sure to do was to keep very detailed inventory counts and logs. There was no “slush” fund in this store. A review of the cash over/short log showed a very interesting trend. One employee was having consistent small shortages, a few pennies here, a little change there. This was nothing that an untrained eye would view as anything other than a training opportunity.

Another interesting fact was the inventory losses tended to happen when this employee was working. There were other employees in the store that also worked consistently when the inventory losses occurred. We knew this was a case of employee theft. I also had a very good idea of what was happening but decided to install a pinhole camera over the register to confirm my suspicions. Three days later the employee theft investigation was over. The employee in question was caught red handed doing what is typically called “drop sales”. He would sell an unsuspecting customer product for cash, accept the cash, use a “no sale” to open the cash register drawer issue change then close the cash drawer and never give the customer a receipt. After the customer left the store the employee did another no sale and took the cash the customer had given him for the product.

So I asked the store manager after he saw an example of this on video, “what are we short?” He immediately stated “the product”, I asked “what else?” , he was confused for a bit and then the light bulb went on over his head “We are short the change he gave the customer”. I asked the store manager how we would have been able to narrow the focus of the employee theft investigation to the product leaving via the register area if we had not had the cash over/short log. He had no answer. I assured him we would have been able to figure it out but the investigation would have gone on a heck of a lot longer and the losses would have been piling up while the investigation continued. The employee admitted to several thousand dollars in product theft via the drop sale method. This example of internal theft proved to be a very good training example for the entire company. “What’s a penny?” is a question store management learned NEVER to ask.

For more information on employee theft , employee theft investigation or internal contact us or call 1.770.426.0547 – Atlanta Georgia

Employee theft happens in many different forms. Most of the time we think of blatant merchandise or cash theft as the most prominent issue. One method that is often overlooked yet yields the potential for serious losses are refund fraud.

I worked an employee theft investigation where the culprit was an employee who worked at the refund desk. I noticed several of the same high dollar drill was missing from the store. I ran a report and noticed three of them were refunded in the same day. Suspicious? Very much so.

I reviewed the transactions on our CCTV system and saw the associate ring a refund without any merchandise present for the same customer in three separate transactions. Well now I know where that loss went! Because there wasn’t any actual product being returned, our inventory was now short the three drills.

While continuing the employee theft investigation, I noticed that this scenario happened several times with several different items. This case of employee theft quickly had reached the thousands of dollars mark.

Once the employee theft investigation had been concluded, we spoke to the employee. She stated that it was easy for her to do because no one ever looked at her returns. This was against our company’s policy to prevent employee theft. All high dollar returns were to be verified by a manager. Due diligence would have prevented these losses from occurring.

Most companies have policies in place for a reason. If they don’t have a policy, make one. Watchful eyes are the best way to keep employees honest. Don’t give them the opportunity, and they will be less likely to try to cheat the systems you have in place.

For more information on employee theft investigation, employee theft or internal theft contact us or call 1.770.426.0547 – Atlanta Georgia

According to most retail sources, Internal theft still accounts for over 40% of retail shrink losses. This beats out the losses incurred by shoplifters, which is only around 30%. When I talk to my managers and employees on the floor, they generally think of shoplifters as the biggest cause of losses. Sometimes it’s hard to educate them that statistically it is the other way around.

I think there are a few reasons why most of the associates don’t truly understand the scope of internal theft. The first is that catching a shoplifter attracts a lot of attention inside the store. You need witnesses that are generally store employees. Everyone seems to take note when LP comes back in with a shoplifter. Then the police cruiser outside the store makes an even bigger impression. I have always said that catching shoplifters are great PR for the LP department.

Internals are different. Employee theft investigations are always covert. No one inside the store is aware of what is going on until it’s time for the interview. Due to privacy concerns, even after an employee is terminated for internal theft, very few people are aware. Inquisitions are generally met with a blanket statement like “ Yes, so and so is not with the company any more”. It could be the biggest case ever, and a $20 shoplifter would still create more buzz in the store.

The other reason is that people still expect the best of each other. No one really wants to believe that a co-worker they see every day, or chat with in the break room could be guilty of internal theft. While employee theft investigations are constantly being initiated, respect for the employee’s reputation is also held in a high regard. Guilty until proven innocent is crucial to a successful and respectable investigation.

For more information on employee theft , employee theft investigation or internal theft contact us or call 1.770.426.0547 – Atlanta Georgia

There is a double-edged sword in the Loss Prevention industry regarding employee theft cases. High dollar cases are often career makers. These are the employee theft investigations that are talked about on conference calls and in managers meetings. Some companies use these cases as examples even in new hire training. Somewhere along the line though, someone always stops and asks- how did this case get so high?

For most incidents of employee theft, there was an operational breakdown. A door left unarmed. Maybe it was the EAS alarm was never responded to, or a refund never questioned. If someone had used the mantra Trust but Verify, would the losses continued?

Generally the merchandise stolen is not recovered in an employee theft case. Same thing goes for cash. Most common is restitution. That means the employee agrees to pay back the dollar amount for which they have conceded to having taken from the company. If the dollar amount gets to high, the chances of a store ever really seeing the money come back is slim to none.

I had a case where the employee agreed to restitution of $100 dollars a month for the next fifty years to pay everything back. The store will eventually get their money, but that year’s shrink line still took the hit and profits were lost, along with a few bonuses!

While employee theft investigations are difficult to catch early on, it’s better in the long run. The key is to track and catch in the early stages of the theft, instead of after the escalation of losses takes place.

For more information on employee theft, employee theft investigation or internal theft contact us or call 1.770.426.0547 – Atlanta Georgia