PREVENTING REFUND FRAUD
I’m happy to say that I’ve survived another holiday shopping season in the retail industry. We all are, I’m sure. Now that the hustle and bustle is behind us, we need to turn our attention to refund fraud, which peaks this time of year. I normally see 10-12 cases each year in the two weeks after Christmas. Why is this so?
There are several reasons why refund fraud seems to increase in popularity this time of year. I believe the main reason is that cashiers think they can mask their dishonest actions in with the copious amounts of returns being conducted. While you can be the victim of employee theft at any point in the year, this period of time is really the best opportunity for a cashier to steal thousands, perhaps without you ever noticing.
How many times will you simply take care of a customer? They are bringing back a gift and want cash, or a credit to their account in lieu of store credit. I mean, there are hundreds of people in line waiting to return an item right now. In my stores, managers make this call about 5% of time. So if, during this time of year, a manager audits a cashier refunds, they don’t really think twice if they see a refund without a receipt where cash was given back. This is where a dishonest cashier can really take you to the cleaners.
Let’s say that for every day this cashier works, they conduct a fraudulent refund (or two) for $300. The cashier figures they can get away with it for at least 2 weeks, usually when the return traffic dies down. Working 5 days a week, this cashier can skim $3,000 from you without you ever realizing it. The cashier simply processes a refund transaction on the register without a customer present and selects cash. They then pocket the cash and voila! This is one of the most common forms of employee theft.
About three years ago, I had a cashier do this to me at one of my stores. This particular cashier had memorized the manager’s key code as well as the sku number for a high dollar pair of shoes. Over the course of 3 weeks, the cashier conducted over $20,000 in refund fraud by returning the same sku for cash, multiple times a day. This wasn’t just a case of manager’s overlooking returns due to sales volume, but a control measure failure on every level. You can prevent this from happening to your store by a following a few simple steps.
Cashier supervisors should always match refund documents at the end of each cashier’s shift. In my experience, a dishonest cashier will throw away the register receipt instead of entering it in with their paperwork. Missing refund slips should always be investigated. Next, any deviation in policy needs to be approved by a manager. This allows you to easily spot potentially fraudulent transactions. Last, randomly audit and count several tills throughout the day. If dishonest cashiers are holding cash to pocket later, counting their tills in the middle of the day is a great way to catch them. By implementing a few simple control measures, you can help deter employee theft and make sure your profits stay in your pocket!
For more information about Refund Fraud contact us or call 1.770.426.0547.