Top 7 Types of Retail Fraud and What You Should Do To Avoid It
Everyday, acts of retail fraud are committed at retail locations across the country, and while it may seem like one missing piece of candy or sweatshirt won’t break the bank, think again. Each year, billions of stolen dollars fall into the hands of criminals, instead of retailers who need that money for upgrading business operations, human capital, and promotions. In fact, in 2014, the NRF reported that retailers lost $44 billion to fraud. With such huge margins at stake, loss prevention has become a huge focus for many retailers who are working hard to not only shrink retail fraud within their own company, but also throughout the entire industry.
The common types of retail fraud taking place are:
- Employee Fraud
- Refund Fraud
- Discount Abuse
- Sweethearting (false price adjustments)
- Vendor Theft
- Cash Register Tampering
- Wardrobing (returning after use or “renting”)
While fraudsters have the ability to attack from all angles of the sales process, your company has the tools to combat it. Here’s what you should be doing to avoid retail fraud:
Upgrade Your Point of Sale System
One of the best tools available is an upgraded point-of-sale system. With today’s technology, a good POS system offers a variety of features that will help you keep track of purchases, spot unusual trends, take field notes on customers returning items too often, produce digital receipts, and even validate checks being used as payment. Being able to detect red flags and store information on purchases will give you the power to question and crosscheck skeptical returns made by both customers and employees.
Implement Eligibility Verification
Offering exclusive discounts to market segments like students, military, teachers, your employees, or even industry professionals is a great way to reach new markets, show your support, and personalize customer experience. However, these offers also leave a gap for fraudsters to claim discounts they are not eligible to receive. Eligibility verification is the solution that allows you to openly market your exclusive discounts in-stores and online knowing that only those who are truly eligible will gain access. The best part of eligibility verification is that it goes hand-in-hand with your POS System and can be implemented directly into any part of a retailer’s purchasing process.
Streamline Policies and Procedures
Many companies overlook the importance of streamlining company policies and procedures in regard to fraud. Without a plan in place, employees may feel more free to do things like give away discounts to those who don’t qualify for them or even tamper with registers. While loss prevention can be a tough topic to tackle and implement, it’s crucial to make sure that all employees and company policies are on the same page. This will help set the precedence on procedures with discounts, start discussions around new implementations like POS or eligibility verification, outline the red flags to watch out for, and most importantly, help to get everyone on board with loss prevention. Something as simple as streamlining the policies and procedures can make a difference in decreasing both consumer and employee fraud.
While there is no way to virtually eliminate all retail fraud, incorporating a good POS system, introducing eligibility verification, and streamlining your policies help to cover your bases and give you the ability to protect your business.
Photo credit: Pexels
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