DJDurant Loss Prevention | Retail Management

Clear plastic bags or purses to deter employee theft?

I've been following a discussion on linkedin.com about instituting a clear plastic bag/purse policy to deter employee theft. I'm using this topic as a collection point for the information I'm finding regarding the subject.

Several people described the policy as ineffective because of the following reasons:
-Wasn't required or enforced for management.
-Bags/purses were not checked when employees left work.
-Not enough time to check bags.
-Person who checks bag does not want to "accuse" somone so they do not report an incident.
-The employee will just steal some other way.(this argument can be made for any policy!)

I see the above as a failure of execution rather than a flaw in the actual policy. Effectively designing and implementing a policy of clear purses/bags could avoid many of the flaws outlined above.

-Top-down implementation - all levels of management need to follow the policy.
-Rotate employees performing bag checks frequently. Randomly perform "second" checks where a manager performs a bag check after the initial check.
-Make the check part of the clock-out procedure at the store so it is not skipped.

I think what a clear purse/bag policy does is create risk. If in an employee that wants to steal thinks the risk is too great they will not steal. This policy could push employees on the fence about stealing away from the theft.

What happens when you lack internal controls…

Here are four stories of employee theft, fraud, and embezzlement that illustrate how a lack of internal controls results in loss.

A former investment banker has admitted stealing almost $NZ18 million from ASB customers in New Zealand's largest employee theft.

Source: http://www.smh.com.au/business/world-business/banker-admits-to-biggest-nz-employee-theft-20100202-n9k0.html

“It was the Friday of Labor Day weekend. I suddenly don’t have a secretary. I’m thinking of everything I have [to review]: what’s gone in and out of the trust account, the accounts receivables. Plus I’ve got client work to do, and a brief was due the following week,” Olson recalled.

All told, his assistant of about 18 months had stolen approximately $20,000. It took Olson’s newly-retired wife about 90 days, working all day long, to piece together their losses. The now-former assistant had covered her tracks very well.

Source: http://wislawjournal.com/article.cfm/2010/02/08/Office-theft-cases-illustrate-importance-of-oversight

Much of the rest, about $900,000, was because of employee theft, unethical behaviour and wasted resources.

In one incident, a worker reversed two bank deposits and pocketed about $273,000.

Another employee stole $63,000 in petty cash and money orders. The employee was disciplined and no longer works for the city. Police are investigating.

Source: http://toronto.ctv.ca/servlet/an/local/CTVNews/20100205/auditor_report_100205/20100205/?hub=TorontoNewHome

A 25-year-old Middletown man surrendered to state police today to face charges he embezzled funds for two years from his employer.
Andrew Chambers, of East Dickerson Lane, was charged with theft and falsifying business records -- both felony offenses.

Source: http://www.delawareonline.com/article/20100202/NEWS/100202033/Manager+charged+with+embezzlement

Taking Out the Trash

Employees are taking out your trash and your merchandise. It happens all the time. Taking out the trash is an opportunity for your employees to remove your merchandise so they or an accomplice can return later to collect what they've stolen. Strong controls around trash removal are an important part of any comprehensive loss prevention plan.

• Require two employees to take out the trash. If that's not possible they need to have another employee check the trash for merchandise just prior to removing from the building.
• Have set times to take out trash.
• Collect all trash into one location prior to removal to dumpster.
• Invest in a compactor, and require all trash to be put into the compactor. Don't let employees leave trash outside the compactor.
• Regularly inspect your dumpster/trash area for merchandise.
• Use clear trash bags.
• Require all boxes to be broken down/folded flat.

The key to any program (loss prevention or otherwise) is to follow and enforce procedures.

Refund Fraud Indicators

I've compiled a list of useful refund fraud indicators...

• Multipe refunds, one receipt: Can indicate that a customer returned one item, and the cashier/manager is using the receipt to refund the remaining items for cash.
• UPC keyed, not scanned: Could mean that cashier/manager is using a found receipt to key in UPCs of items to refund (since the actual item isn't at the desk).
• Multiples of a single item: Item may be available or near the register, and cashier/manager uses that item to refund for cash.
• Percent of refund dollars to sales dollars/Percent of refund transactions/sales transactions: Deviation from the company/store average can indicate fraudlent refund transactions.
• Multiple refunds to same credit card: It's not unusual for a person committing refund fraud to refund the money to their own credit card/debit card(or an accomplice's card).
• Loose receipts at register: Receipts left behind by customers or reprinted receipts are left at register instead of being thrown away immediately.
• Reprinted receipt used for refund: A reprinted receipt (your receipts do indicate "Not original receipt" or "Duplicate" when reprinted?) is used for a refund could indicate cashier/manager reprinted the receipt to use for a refund.
• Refunds that occur before or after store hours.

Any additional methods you use?