Every year, retailers are losing millions of dollars to theft and, unfortunately, one of the biggest causes comes from employee theft. Employee fraud can occur in any form, from something as little as “forgetting” to swipe a $1.00 transaction to funneling thousands of dollars into a personal account.
The main reasons employees typically commit fraud are:Pressure and incentive – The employee may be experiencing financial stress
Opportunity – The employee has access to enough merchandise to feel that they can successfully commit fraud and also conceal it
Rationalization – The employee is able to justify the fraud based on performance or how they are treated at work.
With employee fraud on the rise, revenue loss is higher than ever as a result of these crimes. Here are jaw-dropping statistics about employee fraud found by Static Brain in 2015:
Employee Theft Statistics:
- Amount stolen annually from U.S. businesses by employees – $50 billion
- Percent of annual revenues lost to theft or fraud – 7%
- Percent of employees who have stolen at least once from their employer – 75%
- Percent of employees who have stolen at least twice from their employer – 37.5%
- Percent of all business bankruptcies caused by employee theft – 33%
- Percent of theft by employees who had ideas stolen at work – 29%
- Average time fraud occurs before detected – 2 years
Sources of Inventory Shrinkage:
- Employee Theft – 42.7%
- Shoplifting – 35.6%
- Administrative – 15.4%
- Vendor Fraud – 3.7%
- Unknown 3.9%
- $1,000,000 and up – 25.3%
- $500,000-$999,999 – 9.6%
- $100,000-$499,000 – 28.2%
- $10,000 – $49,999 – 16.8%
- $1,000 – $9,999 – 7%
- $1,000 or less – 1.9%
- Medium amount stolen – $175,000
- Men – 59.1%
- Women – 40.9%
- High school degree – 34%
- Some college 21%
- Bachelor’s Degree – 34%
- Postgraduate Degree – 11%
With employee fraud occurring in all areas of business, it’s more important than ever for companies to be aware of the red flags associated with employee theft. Investing in a good POS system, implementing eligibility verification, and streamlining procedures and policies company wide are the best ways to start reducing employee fraud within your company. Companies can also reduce employee fraud through creating reward programs, such as employee or industry discounts. Offering benefits will keep your employees happy, make them feel appreciated, and give them less incentive to steal from the company.
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