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Internal Fraud and Staff Dishonesty in UK Retail.

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Retail Employee Theft and Internal Fraud accounts for as much as 36% of Shrinkage, according to several well respected sources. Dishonest staff in the retail sector cost their employers 498 million per annum. This does not mean retail staff are inherently dishonest; most retail staff are honest and hard working people who enjoy dealing with the public. But because of the large volumes of sales that retail staff process, if they were to be dishonest, the cost to a business could be huge.

Common methods of committing high value fraud internal fraud by retail staff may include :-

  • Processing bogus refunds for non-existant customers and then pocketing the cash.
  • Processing bogus refunds for non-existant customers onto credit and debit cards, effectively diverting money from the company bank account straight into the retail employee's account.
  • Taking payment from the customer, then "voiding" the transaction.
  • Working in collusion with outsiders to allow high value goods to pass across the till point for free during low value transactions.
  • Unlocking the retail store after hours to remove large quantities of high value stock.

The most effective retailers at detailing with internal fraud employ specialists in the field of internal investigations. These people use their data mining skills to identify high value cases, then their interviewing expertise to close the case with the employee. They may use a variety of techniques, but the interview must be capable of withstanding challenge within the Criminal, Civil and Employment Law arenas.

CIFAS Employee Fraud The Enemy Within CIFAS has an excellent section on their website dedicated to employee fraud - The Enemy Within. This gives a great overview of the extent of the problem, and a useful list of employee fraud indicators and potential warning signs.
Director of Finance Employee Theft Articles This Director of Finance Online article states that one in 3 thefts are committed by staff. It's clear that employee theft is a growing concern across the whole of Europe. Another Director of Finance Online article warns companies to face up to the uncomfortable fact that senior level staff may pose the greatest fraud threat .
LPEYE This Staff Theft Briefing from the Centre for Retail Research in Nottingham, gives interesting insight into a PwC Staff Dishonesty report..
ECR Report STAFF DISHONESTY IN THE RETAIL SECTOR This excellent ECR Report STAFF DISHONESTY IN THE RETAIL SECTOR: Understanding the Opportunities by Adrian Beck, is essential reading for all engaged in dealing with employee fraud. This report is a very detailed study into the effectiveness of our percieved solutions. It's a fact the internal thieves dislike CCTV, and will steal from the till with the poorest CCTV coverage. How many retailers neglect till coverage when designing their CCTV blueprint ?.

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