Preventing Employee Theft

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preventing employee theft

Preventing Employee Theft

Did you know that every year over $20 billion goes missing due to employee theft and fraud? While our industry only makes up a small percentage of this statistic, employee theft happens in our business world every day. In fact, given the right opportunity, even your star performer could be stealing from you right now. Employee theft occurs when the opportunity presents itself. How do we fight the ‘opportunity for theft?’ By implementing the policies, procedures, and accountabilities that keep honest people honest. When we place controls on our assets—both cash and non-cash—we move closer to preventing employee theft before ever happens.

Opportunity.

Typically, employees are not stealing because they need the money. Instead, they steal when they identify a loophole in the system. At first, they will test their discovery with a small-scale theft and then see if anyone notices. If nothing happens within a few days of the first theft, the employee will try again, this time for a larger amount. Each time the employee steals and doesn't get caught emboldens them to steal again and test the system further. This is how it begins—an opportunity to test the controls. Fail to detect and stop employee theft when it begins and it can result in tens or even hundreds of thousands of dollars in losses.

Direct theft of cash or assets.

Pocketing money directly out of the cash drawer.

Prevention:

  • Install monitored surveillance cameras to track cash handling and ensure security.
  • Require employees to place their valuables (including wallets and purses) in secure employee lockers during their shift.
  • Assign individual logins for cashiers and establish policies that require cashiers to conduct transactions exclusively with their own user account/password. (Never share a drawer!)
  • Select uniforms with no pockets or instruct your wardrobe department to sew uniform pockets shut.

Refunding tickets or merchandise for cash.

In this case, once a ticket or retail product has been sold (tickets scanned for use) and the guest has left the area, the cashier refunds the sale back into the system and pockets the cash.

Prevention:

  • Use a modern access control system (tickets with barcodes) and restrict access to managers and above on tickets that have already been used.
  • Require formal documentation (guest signature and reason for return) to accompany all refund receipts.
  • Implement a third-party audit of these processes.

Ringing up coupons/discounts.

In this case, the cashier applies a discount to the purchase of a full price product and pockets the difference. Instead of the guest paying for the discounted product, the guest pays full price and the cashier pockets the difference.

Prevention:

  • Shift your discounting to online ticket sales.
  • In the digital age, guests hand you their phone to validate a coupon. In this case, issue coupons with unique barcodes that can only be redeemed once. If this is not possible, implement a process where the guest must sign for the discount on the register receipt.
  • Require audit of all discount receipts at cash out.

Reselling tickets after the fact.

In this case, the attendant first collects tickets legitimately sold at the front gate. Then, they attendant keeps the ticket and attempts to resell it for a second (or third) use. This is usually done under the table, oftentimes online (eBay) or off property for cash.

Prevention:

  • Implement tight access controls at the point of entry; use a combination of technologies such as barcode, RFID, biometrics, and facial recognition to match tickets to guests.
  • Post signage at all access control points requesting that guests retain their ticket as proof of purchase.
  • Do not allow attendants to collect tickets from guests; scan for validation instead.

Selling zero-dollar value (Complementary) tickets for cash.

In this case, the cashier has access to sell complementary tickets. These tickets are free and as a result, under a simple cash out, these cashiers will balance.

Prevention:

  • Restrict access (managers and above) for issuance of complimentary tickets to a select few.
  • Require backup paperwork (email or other format) that authorizes the transaction.
  • Add sales information such as Cashier ID, terminal, sale date, and time to the fine print on all system-generated tickets.

Have you caught your employees stealing from your organization? Leave a comment and share how.


Trust, but verify.

- Ronald Reagan (old russian proverb)

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