What You Should Be Auditing

November 5, 2014 by Leave a Comment

theft (11)When you work for yourself, you often spend a lot of time inventing the wheel. There is no corporate policy already in place for your stores to adapt. No one is there looking over your shoulder and telling you what records to keep and for how long. Sure, you probably have an accountant somewhere helping you with some record retention requirements. There are other IRS and tax records that you keep for a certain period of time. Overall, it is up to you to make these decisions and have a standard in place.

One area that can be difficult to make your own standard is having an internal audit. While it is a chore to come up with the questions and audit points, the payoff of having a better standardization and in store accountability will far exceed the trouble you put into to establish an audit.

One of the best places to start is by researching Sarbanes- Oxley. The Sarbanes- Oxley act of 2002 is a set of legal requirements that all organizations, regardless of size, must comply with. It basically regulates financial practices, after several companies were found guilty of falsifying their own financial records. The company’s biggest fallout was that they ended up devastating thousands of their own employees financially.

The ultimate point of the act is that companies are required to provide accurate and truthful information as to the company’s financial status. Over inflating sales, inventory, amongst other practices, to give a deceitful impression of a company’s success is now illegal. Companies must retain records of their financial status to ensure accuracy at all levels.

The easiest way to do this is to perform self-audits in key areas. These audits should be done daily, weekly, monthly and yearly, depending upon the task. Hiring a consultant can provide you with the legal specifics to keep your company on the up and up. Understanding the basics ahead of time can help you decrease those consultation costs, as you will already have some practices in place.

The first place to start is with your inventory. Understanding a cradle to grave approach to your product will not only help you with accuracy in your auditing, but keeping a closer eye on your product will help you decrease your shrink over the long term. Your starting point is with your receipt of goods.

Each shipment of inventory you receive should be documented and a bill of lading retained and filed by month. On each BOL should be the signature of who received the items, the date and time received, and a check mark or tally of what was received- either by piece, box or pallet.

Next, you should maintain listings and reports of items that are taken out of your inventory for a specific reason. If they are damaged and thrown out, sent back to a vendor for credit, used in the store, stolen, etc. There needs to be a paper trail attached to where these items have gone and why. A signature, or employee ID or who reallocated the products disposition should be included with these document (also retained and filed by month).

If you are still using paper sales receipts, including paper journal tapes, those records need to be filed by date, and then month. This is your listing of what merchandise has left your stores and is your proof that these sales actually happened and were not fraudulently contrived. If you have an electronic sales tracking system, you still need to have paper documentation of these sales retained somewhere in case of a computer glitch, etc.

Finally, all returns must be retained and spot-checked for accuracy. Since returns are another way for inventory to come back into the store, it is an important process to verify that these returns are accurate. Look for multiple transactions of the same item, or significantly larger dollar transactions. These are the returns that are most likely to have been done in error (over inflating your actual inventory) or can point to an employee’s dishonest activities.

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The Curb Rule

September 5, 2014 by Leave a Comment

theft (12)If you talk to anyone who works in retail security, they are probably familiar with something called the Curb Rule. It is a limitation made by many large retailers as to how far employees literally can go when they are making a shoplifting apprehension.

The Curb Rule usually states that when making a shoplifting apprehension, if the shoplifter attempts to flee, employees can pursue the subject as far as the edge of the curb of the store’s location. Generally, most stores have a sidewalk in front of them, and the employees should not go past the edge of the sidewalk in pursuit.

The ultimate goal of the rule is to keep everyone involved safe. The further away from the store employees go, the more likely it is that someone will get hurt. It’s not just about an altercation with a shoplifter either, even though a chased subject can be more pressured into trying to fight their way out of the situation.

In one particular incident, I stopped a shoplifter with a cart full of merchandise. The subject turned around and ran, almost getting hit by a car in the process. Had my witness and I gave chase, we most surely would have been hit ourselves. Remember, even shoplifters can sue a store/ company for personal damages if they are hurt during an apprehension.

One of my mentors used to tell stories of how he got a massive scar on his arm. He had been chasing a shoplifter who had climbed a chain link fence. My mentor, slipped while going over the fence, and the top barbs cut his arm. The shoplifter ended up jumping down an embankment and broke his leg. Needless to say, it was quite an expensive mess to clean up. Did I mention that all the shoplifter took was a twenty-dollar shirt?

The Curb Rule has its place as a safety feature as well as for maintaining profits. Often store and parking lot layouts dictate where the boundaries need to be made. Some stores who do not have a front sidewalk need to clearly inform employees of how and where to handle shoplifters, compared to stores with generous sidewalk areas.

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When There Are Children Involved

September 5, 2014 by Leave a Comment

theft (10)When we think about shoplifters and creating policies on what how to apprehend them, and what to do with them during and after the initial confrontation, we are doing so with a general image in mind. We are acting on an image of an adult shoplifter, who may or may not become physically aggressive. What many owners and managers frequently overlook is what to do when there are children involved during the shoplifting incident.

There is a sad reality that many shoplifting situations do involve children. Sometimes it is actually the children (or minors under the age of 18) that are the ones stealing. Sometimes it is adults- parents, caregivers, relatives- that bring children along while the adult is stealing. In some very unfortunate examples, the adults might actually be teaching and encouraging the children to steal for them.

As a result, policies and procedures should be in place to account for these situations. If you are trying to figure out what to do while the incident is already underway, you can end up in serious trouble if you make the wrong judgment call. So here is a quick overview of how to handle some of these situations.

What to do if a shoplifter is a child/ minor under 18 years of age? Start by determining if there is a responsible party somewhere in the store. This needs to be someone over the age of 18 that can oversee custody of the child. It should be a parent or guardian of some sort. A minor babysitter, older sibling, or friend is not who you want.

Next step is to use your best judgment for the shoplifter’s intent. A four year old taking a candy bar has less criminal intent than a seventeen year old stealing a pair of jeans. Determine from there if you are calling the police to prosecute. Ideally any juvenile in your custody should be released to either a parent or guardian, or the police within thirty minutes or less. Always have a witness present when you have a child in your custody. Never release a child out on their own, as you can be held liable if they are hurt, etc after leaving your store.

If the shoplifter is an adult, and they have children present, decide if you are calling the police or not. If you are prosecuting the adult, make sure the local law enforcement are aware that there are children present. They will need to make special arrangements for those children. While the adult shoplifter is in your custody, under no circumstances should the children be separated from that adult.

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Employee Fraud – Trust, But Verify

August 13, 2014 by Leave a Comment

theft (10) During the Cold War arms control treaty negotiations with Mikhail Gorbachev President Ronald Regan became famous for a saying based on an old Russian proverb, “Trust, but verify”. He used the adage to describe the need for transparency in political relationships. But, today it has a broader meaning and can be used as a guideline for establishing trust between an employer and employee.

Many business owners, executives and managers don’t like to face the fact that some of their employees have, are or will be committing fraud – that product, materials and/or money has, is and will be walking out the door. For a variety of reasons they choose denial as their policy for employee theft and don’t address it. Unfortunately, employees take advantage of this and their employer’s trust.

One of the main reasons employee theft can be difficult for owners and managers is that they feel it’s a personal affront. They feel betrayed and believe it’s a personal issue, not a business or legal issue. It’s important for them to understand that it’s an operational and legal issue, not a personal attack.

The “Trust, but verify” concept can be used to develop a strategy. Managers can trust their employees, as a whole, while establishing transparency and accountability in daily business operations. The Association of Certified Fraud Examiners 2012 Report to the Nations on Occupational Fraud and Abuse (ACFE 2012 Report) makes several recommendations on how to minimize fraud.

* Anti-fraud training – Organizations who have training programs for employees, managers and executives have less costly losses and shorter durations of fraud.

* Means to report – Providing people with ways to report suspicious activity is a critical part of prevention. Fraud is almost 3 times more likely to be detected through employee tips than any other method of detection.

* Controls – Companies should establish, monitor and maintain 3 areas of controls – general internal, physical and computer/technology based.

* Screening new employees – This is an area where employers can be lazy. Many times hiring is done by the “I like him, he’s hired.” method. This is an important area to do the due diligence.

* Division of responsibilities and oversight – Don’t give too much responsibility to one person and establish checks and balances in everyone’s job. Fraud is committed by a person who the employer trusts, that’s how they’re able to get away with it. In small      businesses it’s most commonly perpetrated by a family member or friend.

* Pay attention – 81% of fraud perpetrators display obvious red flags: living beyond their means, financial difficulties, unusually close ties with vendors or customers and unnecessary controlling/secret behavior (ACFE 2012 Report).

Employees will steal from their employers, it’s not a matter of “if or maybe”, it’s a matter of “when and how”. A responsible company manager will accept their personal and fiduciary responsibility to protect the company, its profits and the honest employees by establishing and following firm guidelines which don’t enable fraud.

Nicole Abbott – writer, educator and psycho-therapist

 

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Social Media Helps Authorities Catch Criminals

July 30, 2014 by Leave a Comment

law-3As of the first quarter 2014, Facebook had 1.28 billion monthly active users. This of course is only one social media site that people tend to gravitate to and one of the many sites authorities are using to capture criminals dumb enough to post selfies with stolen merchandise, or bragging about their crimes. Social media sites are playing many roles in the lives of people, from keeping them connected to friends to preying on victims.

For more about this and other stories follow the links below.

Facebook Led These Criminals To Face Time Behind Bars

Doing a crime is inherently stupid, but boasting about it on social media takes it to a whole new level of idiocy. Bidness Etc takes a look at some of these ‘criminal geniuses’ and how their addiction to social media got them caught.

They say social media is nothing but a waste of time and intelligence. While we agree with this notion to a certain extent, we believe that it is actually the horde of brain-dead, half-witted, below-average excuse for human beings that destroy social media’s reputation on a daily basis.

We believe that this epidemic (i.e. stupid people running rampant on social media) is because of the inherent nature of the internet. You see, everyone – even criminals – have access to it, can sign up for various sites, and are then free to express their worthless opinions there. Speaking of petty criminals, there have been many instances in the recent past where the criminal’s own stupidity on Facebook Inc (FB) helped the law catch them and put them behind bars for good. The law’s triumph not only restored our faith in the legal system, but it also gave us hope for the future of social media sites as well.

Criminals using social media sites to prey on victims

NEW ORLEANS —In the past three weeks, three similar crimes happened in the Crescent City – all with one common thread: social media.

Police said sites like Tagged, Tinder and Kik have been used to lure victims to potential danger, resulting in robberies and carjackings.

The first case happened in the 1600 block of Baronne Street, where police said a man met a woman and was later robbed by three men.

The second crime was committed in the 2100 block of Danneel Street by 10 men – four of whom had guns.

Digital Detectives: Social Media Helping Police Put Criminals Behind Bars

ANNAPOLIS, Md. (WJZ) — Anne Arundel County Police say social media is helping them put criminals behind bars.

Rochelle Ritchie explains how.

At the stroke of a keyboard, residents in Anne Arundel County are becoming digital detectives in helping Anne Arundel County Police solve crime.

“We’ve been able to solve crime based on social media tips,” said Lt. T.J. Smith, Anne Arundel County Police.

After one man’s photo was placed on their Facebook page, the comments began to pour in. It didn’t take long for the alleged ATM robber to be put behind bars.

“We have the opportunity to get the message out to tens of thousands, even hundreds of thousands of people at the click of a button,” Smith said.

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If They Steal $1,000 That’s All I Lost….. Right?

July 30, 2014 by Leave a Comment

theft (13)Whether it involves employee theft, shoplifting or some other real loss, you actually lost a lot more than $1,000. And I mean real money. One of the advantages I have as the former Senior Loss Prevention Executive for several major companies, is that I bring a larger scope of experience to you, the small and medium business owner or manager.

Okay, so the thief got away with $1,000 of your merchandise but that ​​is ​​not all you lost. That merchandise had to be purchased, paid for, shipped, handled by your staff and made available for sale to your legitimate customers. In many cases we do not factor these tasks and the ever tighter profit margins we work with into the loss equation.

As an example, let’s say that your profit margin after taxes, labor and other expenses like rent, electricity, gas…. is 1.5%. Actually this is an average for most US retailers. Some have a higher profit margin others like grocery stores average less than 0.5%.

So take your loss, in this case $1,000 and divide by your margin, again in ​​this case 1.5% (.015). The result is $66,666.67. That is your actual loss. You are going to have to sell another $ 66,666.67 simply to BREAK EVEN on a $1,000 loss! How many more merchandise items will ​​you have to purchase and sell to do this? And remember that is only to break even on the $1000 loss NOT to make a profit.

Oh wait a minute – you have insurance. Few policies cover this kind of loss. If they do, try putting in for several of these cl​aims. You will probably find yourself looking for a new insurance carrier after they drop you or raise your rates through the roof.

There is only one way to do this and be profitable: prevention. You must stop losses before they occur. In addition your loss prevention efforts cannot consume all of your time or resources. Otherwise you lose focus on your sales. But the LP effort has to be a part of your standard operating environment, not on and off. You would not turn off the power to your sign every other day to save money. Why would you do that with loss prevention?

The really great news is that a solid loss prevention program is neither expensive nor difficult for the small to medium retailer. You should loo​k at loss prevention in three areas that are all working together at the same time.

First is Training & Awareness – have you set the standard right from the very beginning with your employees? Do they know what is expected of them and their performance including their responsibilities to protect your assets? Do ​​they understand you do not tolerate any theft by them or their friends regardless of size?

Second – do you have an operational audit or review of your operations? Do people actually know and believe that you look in depth into your operations and losses. Are you ACTUALLY holding them responsible for their performance?

Last is investigation. You must look into and understand why a loss has occurred. Then take action to keep it from occurring that way again. Thinking that it will go away or even worse fix it by itself is ridiculous. IT WILL ONLY GET WORSE.

All of then feeds back into Training and Awareness. Once you start this cycle if will feed on itself. You will ​​even find that your core employees will pick it up and go with it. I have other techniques to this process that you may find helpful. Give ​​ me a call at 770.426.7593 x101 if you would like to discuss this or any other loss prevention issues. Again, remember shoplifting and employee theft losses can be controlled!

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Loose the Battle, Win the War

July 30, 2014 by Leave a Comment

theft (1)I read a horrifying news article about a man, who had been convicted of shoplifting, winning a lawsuit to the tune of $500,000. That’s right- half a million dollars paid out to a man who was convicted of shoplifting from a store. The report was horrifying for two reasons.

The first, because he was a shoplifter who might never have to work a day in his life again, basically was paid out to steal. Two, because the reason he won his suit was because he was injured during the course of the apprehension as a result of his shoplifting.

It raises a very important question of where do we, as retailers and business owners, draw the line? Where do we say we will allow this particular loss to happen to avoid an even worse loss? In essence, how do we loose the battle to win the war?

As the news report goes on, this particular man seems to have made a habit of bringing up (and winning) lawsuits stemming from his alleged shoplifting incidents. When the businesses could not win their cases against this man to convict him of shoplifting, he turned around and sued for slander, liable, and wrongful apprehensions.

While this particular situation is probably one of the more extreme examples of how a shoplifting stop can go horrifically wrong, this is not an unrealistic topic for businesses to be aware of.

Any time a shoplifter is stopped, or even approached, we have a responsibility to be right- 100% right. We also have to be able to prove it in a court of law. The days of acting on gut feelings or suspicions are long gone.

We have a right to protect our stores and to make shoplifting stops. We need to do so in a way that is also fair and legal to the suspected shoplifter- lest we also incur a half million dollar settlement at our expense.

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Start Before It Becomes An Issue

July 30, 2014 by Leave a Comment

theft (2)Employee theft can and will happen to every small business at some point in time. The question of how you handle it, and what you can do about it relies on the protections you have in place before an incident occurs. Without these protections in place setting precedence, you might find your hands are tied in regards to the specific incident currently in front of you

The best place to start is in having anti theft verbiage in your employee handbook. That of course, means you need to have an employee handbook in place to standardize all of your business policies. If you do not have a handbook, you need to develop and implement one as soon as possible.

Within your handbook you need to be clear and broad all at the same time. A sentence stating that employee theft of any kind will under no circumstances be tolerated. Theft is defined as possessing or removing any company asset or another employee’s possessions without prior authorization from management.

You can further elaborate on the different types of company assets, or you can leave it open to all assets from pens and paper to merchandise and cash. Next you may want to include that the company will prosecute all cases of employee theft.

After having a written record of the company’s intentions, the policy should be verbally covered in employee on boarding and training. This way there is no confusion as to what the expectation is. Some businesses even have the employees sign a paper (to be retained in their employee file) that they are aware of this policy.

By clarifying up front, most employees will take heed to this warning. For those that do not, it is much easier to prosecute the employees for their theft, or misappropriation of company assets, when there is proof that the employee was aware of the consequences ahead of time.

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Retail Shrinkage and More News

July 22, 2014 by Leave a Comment

theft (13)Recent research about loss prevention states that the industry loses about $57 billion yearly. The perpetrators are more brazen and the consequences more expensive. Surveillance and private surveillance personnel are not enough to stop shrinkage in the retail industry. The steps that the store employee can follow depend on the store and the state they are situated. Private Citizens are generally not allowed to restrain people against their will and by doing so opens the doors for civil or criminal law suits. For more news about shoplifting follow the links below.

Survey: Retail shrink translates into $57 billion loss; cash theft jumps 20%

New York — Shrinkage levels average 1.27% of sales, which translates to a $57 billion loss to the industry, according to the U.S. Retail Fraud Survey, which is based on research into the systems and strategies used by 100 leading North American retailers.

The biggest area of store loss remains employee theft (38% of shrink), up 3% from last year, according to the study, published by U.K. based Retail Knowledge and sponsored by Volumatic and Kount. It is followed by cash theft (24%), up 20% from last year, administration and book keeping errors (21%), down 9%, and shoplifting (11%), down 15%.

The biggest area of online loss is fraudulent use of credit cards (59% of shrink).

In other survey highlights:

• Return fraud is costing retailers an average of 0.25% of sales this year, compared with an average of 0.4% last year.

• With regards to loss prevention departments, on average, each member of the fraud prevention team is responsible for $103 million of sales.

Retailers apprehend shoplifters and dishonest employees in record numbers

While the increased brazenness and skills of both shoplifters and unscrupulous employees continue to plague retailers across the United States, the industry’s most respected loss prevention researchers offer some good news in their just released survey. According to numbers highlighted in the 26th Annual Retail Theft Survey conducted by Jack L. Hayes International, the leading loss prevention and inventory shrinkage control consulting firm, both apprehensions and money recovered from retail theft increased again in 2013.

The survey says almost 1.2 million shoplifters and dishonest employees were apprehended in 2013 by just 23 large retailers, who recovered over $199 million from thieves. The figures show that shoplifting apprehensions were up 2.5 percent and recovery dollars increased by 4.5 percent. When it came to cracking down on internal theft, the survey revealed that apprehensions for dishonest employees rose 6.5 percent and recovery dollars rose 2.5 percent. According to Mark R. Doyle, President of Jack L. Hayes International, these figures display a positive trend of apprehension and recovery that has been seen for three consecutive years.

A look back: Four lessons from my first LP conference

I was named NRF’s Vice President of Loss Prevention a little more than a month ago. It was perfect timing for me to jump in and do my best to meet thousands of my peers at NRF’s annual Loss Prevention Conference. Here are my top takeaways after experiencing the event for the first time behind the scenes.

  • There’s a live stream audience for retail loss prevention. Gus Downing, producer of the LP News Network (LPNN), led this historic first-ever live broadcast from any loss prevention conference. Thousands of viewers watched LPNN’s eight hours of educational content, news and even an interview with me and Vicki Cantrell. Thanks to Downing and his team for their diligent coverage of the retail loss prevention issues that matter most to our community – at the event and throughout the year. There is added value as the stream is currently being broadcast on the D&D Daily as the gift that keeps on giving to the LP community.
  • We’re in the age of “Brand and Business Protection.” The protection of products, our brands, employees and customers: No matter your focus, Cantrell was direct in her opening remarks last month. “We must prepare, plan, preserve, prevent and – most importantly – protect those we are entrusted to serve. By protecting our organizations, we keep them strong, and it is the strong who survive and thrive.” The transformation of NRF’s Loss Prevention Conference to NRF PROTECT is a commitment from NRF to prepare this community for the growing challenges, threats and responsibilities for retail loss prevention professionals. Keep your eyes peeled for more to come!
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Why Your Employees Need to Know The Shoplifting Policies in your Store

July 16, 2014 by Leave a Comment

law-3A shoplifting case in any state can run from an infraction or a misdemeanor to a felony charge. Many communities across the United States are urging government officials to make a shoplifting case charge into something serious to deterred shoplifters from entering their stores and getting away with stolen merchandise.

Policies across the retail industry vary tremendously. Regardless of the policies you want your employees to adhere to, those policies have to be understood and follow through regardless of the situation. Law suits against retail stores are prevalent and costly, educating your security employees about the policies and laws in the state and your store can prevent expenses your business can do without.

Follow more stories about shoplifting by following the links below.

Target security officer fired after reporting shoplifting

Dallas Northington spent nearly eight years working for Target in loss prevention, roaming the stores and scanning the surveillance cameras. In an episode at the Leesburg Target store in May that he said was typical, a man was allegedly captured twice on video shoplifting, and Northington responded as he said he always did: He called the Leesburg police, made a report and provided them the videos of the two incidents.

But the man in the video may have been a Fairfax County sheriff’s deputy, Northington said he soon learned. And within days, two things happened: The deputy retired from the sheriff’s office and Target fired Northington, 29, a married father of two with a third child on the way.

Northington said Target officials told him that he had violated procedure by not filling out the proper paperwork before contacting the police, though he said his office had operated the same way for years. He said he also was told that he had been insubordinate for not seeking approval before calling police, though he said the standard practice was for him to act as needed.

Va. sheriff’s employee to be charged in shoplifting

WASHINGTON (AP) – Leesburg police say a Fairfax County Sheriff’s Office employee will be charged with shoplifting in a case that drew attention after the Target security guard who reported the alleged crime was fired.

The sheriff’s office employee has not been identified, and formal charges have yet to be filed.

Leesburg police say they identified a suspect a few days after the theft in late May and were awaiting word from Target on whether to proceed with charges. Police say they got that word from Target on Monday.

Police say the decision to fire the security guard was a corporate decision made by Target. Dallas Northington told The Washington Post that he was fired after Target told him he violated procedure by filling out paperwork before calling police.

Man wanted for shoplifting at Suffolk Walmart

Suffolk, Va. – Suffolk police are seeking the public’s assistance in identifying a man involved in a shoplifting incident at Walmart.

It happened on July 12 shortly after midnight at the Walmart located in the 6200 block of College Drive.

The suspect is described as a black male in his late teens or early 20’s wearing a dark tank top, camouflage shorts, a dark do-rag, flip flops and dark socks.

Surveillance cameras captured the suspect pulling a plastic Walmart bag from his pocket and placing several items in the bag and then proceeding past the register.

A loss prevention officer saw the suspect driving off in a tan colored Ford SUV.

Anyone with information is asked to contact Crime Line at 1-888-Lock-U-Up.

When calling Crime Line, callers do not have to give their names or appear in court.

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