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9 different types of employee theft and how to deter them or eliminate them

April 9, 2024

Let’s take a moment to discuss 9 different types of employee theft, ways in which employees are stealing from companies and what a company can do to better defend themselves against the worst theft of 2024.

How Solink Helps 1
When it comes to employee theft, look no further than Solink to help to be the biggest weapon you have against it. Solink is a platform that connects your point of sale transactions with your video footage and looks for unusual transactions and activity in the data. Having Solink connected to your systems is like having eyes on every transaction.

What Is Employee Theft?

Simply put, employee theft refers to the act of employees unlawfully taking or misappropriating company assets, resources, or time for personal gain. This can encompass a range of behaviors, including stealing physical goods, embezzling funds, falsifying records, or even time theft by being absent, unproductive, or engaging in non-work-related activities during paid hours. It poses significant challenges to businesses, impacting their financial stability, reputation, and overall operations.

When it comes to employee theft it can be difficult to keep your eyes and ears on everything. Thankfully, you’ve got an advantage: Solink helps thousands of brick-and-mortar customers discover employee theft in their businesses, and that’s how we know what types of employee theft and scams are top of mind for most employers. Join us as we explore effective prevention methods to safeguard your enterprise against these threats—and remember, there’s even more content about employee theft in our complete guide to employee theft!

 

To see how Solink’s VSaaS platform can help you get a handle on every type of employee theft, sign up for a demo today.

 

Types of Employee Theft

1. Skimming

This popular POS employee theft scam occurs when an employee charges a customer full price but takes a little cash out of the total for themselves. This may result in telltale cash register imbalances, or, it can be more complex, like using coupon codes on a customer’s purchase while still charging them full price and then pocketing the difference.

In situations where your staff manually accept cash in a fast-paced environment like a bar, this is an easy scam to pull: charge a customer $5 for the beer, deposit $4, and blame the fast pace of the evening for the till imbalance later on.

Unlike other forms of theft that may be more apparent, skimming often goes undetected for extended periods, allowing perpetrators to siphon off funds gradually without raising suspicion. This is why a proper security camera system and the right security camera software features matter a lot.

2. Under ringing

Under ringing is a popular scam that’s a bit harder to spot than skimming, because the cash register total will balance out at the end of the night. What won’t balance out is your inventory count. When an employee charges a client for all five of their purchased items but only inputs four of them into the cash register, that’s under ringing.

Note that, beyond employee theft, self checkouts are at a high risk for under ringing.

You may not notice anything is wrong until inventory day when you realize you’re completely sold out of item “X”, yet don’t see any sales of that item in your data. The bigger your business and larger your inventory, the harder it is to catch this scam. Some well-placed security cameras in your restaurant can help you track down the missing inventory.

3. Sweethearting

This is one of the main forms of discount abuse.

Sweethearting can take many forms, but it usually relates to an employee giving a friend or family member a “discount”. They do this either by literally inputting their employee discount or by other cash register tricks like voiding a scan, giving a refund without retrieving the product, overriding the price manually, or failing to scan an item at all.

Some estimates state that sweethearting costs businesses nearly $100 billion annually. It’s a type of employee theft that is often taken for granted by the perpetrators, who may feel like they’re entitled to the discount or don’t understand how it doesn’t apply to their extended family. Without eyes on the cash at all times, this type of theft is hard to catch because you can’t know for certain if your employee was simply buying something for themselves while on break.

Solink can help you find discount abuse quickly, easily and controllably by integrating your POS and security cameras directly without a text inserter.

4. Product theft

A more direct and apparent form of theft, product theft is self-explanatory. The complication comes in when employees are asked to explain their theft. It’s very easy for a fast-food worker to see a box of fries or a latte as a small “perk” that doesn’t hurt anyone, but these small items can add up. Product theft is the internal version of shoplifting, and you can use the same tools to spot employees stealing inventory.

Of course, you may also encounter the more brazen employee thieves who steal larger inventory items where no justification could be possible. Try as they might to excuse it, no one really believes their company owes them a free big screen TV or a new pair of shoes. Worse still is if you’re dealing with a thief who’s turning a profit on their theft: taking multiple items and selling them online or to friends for a profit. Halting employee theft of inventory is a mandatory step in reducing shrinkage.

To see all the ways Solink can help your business, book a demo today.

5. Blunt theft

Direct and impactful, blunt theft occurs when an employee takes cash directly from the register. There could be several motivating factors for blunt theft, but a good place to begin your investigation is with staff members who have been vocal about feeling underpaid, under-appreciated, or taken for granted.

Depending on your store’s cash handling procedures, identifying instances of theft from the register could be a time-consuming process, especially in environments where multiple employees regularly access the same register throughout the day.

If you’re facing challenges in pinpointing such incidents of employee theft, it might be worthwhile to consider a professional audit of your business security camera system.

Discover how Solink can enhance your company’s security camera setup by scheduling a demo today. See firsthand how our solutions can streamline your security measures and safeguard your business against potential losses. Sign up for a demo today.

6. Time theft

Coming in late, leaving early, or taking long breaks cost your business, especially if you inadvertently end up compensating for these MIA staff by adding an extra person to the sales floor. Take a look at our related article on how to identify and minimize time theft.

7. Short ring

Using an example up front for this one, let’s say your bartender makes a cosmo that sells for $10, but rings it in as a screwdriver that sells for $5, and pockets the difference. It’s difficult to catch until your inventory is out of whack, this popular scam can cost you thousands of dollars by year-end.

One of the reasons why this type of employee theft persists is improper loss prevention training. The new bartender sees the senior person doing this trick and assumes it is accepted practice by management. Be sure to keep your theft conversation ongoing with employees so they know you take it seriously. That’s just one of our tips on talking to staff about theft.

8. Gift card

There are many ways to scam gift cards, but maybe the simplest is to scan a customer’s card, tell them it’s now empty and that they’ll be throwing it out—when in reality your employee is stashing it for later because there’s still a balance on it.

Customer experience is important for every business, and employees stealing from your customers should be treated the same as if they were stealing from you directly.

Take a look at our step-by-step guide to preventing employee theft.

9. Return Fraud

Return fraud, also known as refund fraud or refund theft, refers to the exploitation of return or refund procedures for financial benefit. This deceitful practice encompasses various methods, with the most prevalent involving the acquisition of an item from a store, either through legitimate purchase or theft, followed by its return to the store for a refund.

The return processes provided to customers serve legitimate purposes, such as facilitating exchanges for ill-fitting items. However, numerous tactics exist to manipulate these processes, resulting in financial gain at the expense of the store, contrary to the intended purpose of the return system.

Examples of refund fraud include shoplifting an item and subsequently returning it to the store without a receipt to obtain a full refund, as well as fabricating a receipt to falsely indicate a prior purchase. Such fraudulent activities undermine the integrity of retail operations and can significantly impact businesses’ financial stability and customer trust. Implementing robust fraud prevention measures and enhancing oversight of return processes are crucial steps for retailers to mitigate the risks associated with return fraud.

 

What this means for you:

Keeping your eyes open for different types of employee theft can be really difficult, and you’ll likely rely heavily on your transaction data and video footage to investigate any suspicions. For many managers and owners, investigation can be such a drain on time that often it’s not completed, or even started.

Hours of footage on a grainy screen in the back room while business is still rolling all day long sounds like a job most don’t have time for. Solink can save you all that time and even find discrepancies in transactions on its own, so remember there’s help here waiting for you!

You might also want to download this great infographic outlining this year’s top types of employee theft.

We’ve included 8 of these different types of employee theft on this poster. Post it in your break room to show your staff that you’re aware and watching for signs of problems. Often, thieves underestimate how smart their bosses are; deter them from the start with preventative measures.

Types of employee theft infographic.
A tiny preview of this great download!

Types of employee theft FAQ

So how can businesses effectively prevent employee theft, beyond surveillance and monitoring?

Beyond traditional security, businesses can adopt several strategies to prevent employee theft. Strengthening hiring and onboarding processes by conducting thorough background checks and instilling company values can significantly reduce dishonest activities. Creating a culture of trust and accountability, implementing robust cybersecurity measures, adopting cashless transactions, and conducting regular security audits are also effective steps. Ensuring employees feel important, engaged, and adequately compensated can decrease their motivation to steal. Transparent communication about theft policies and consequences, along with regular training on loss prevention strategies, are crucial.

Moreover, establishing clear and consistent procedures for cash handling, such as requiring dual authorization for register access and implementing strict inventory controls, can act as deterrents. Encouraging an open-door policy where employees feel comfortable reporting suspicious behavior without fear of retribution fosters a proactive approach to preventing theft. Regularly rotating tasks and responsibilities among staff members can also minimize opportunities for collusion and unauthorized access. Additionally, conducting surprise audits and spot checks can keep employees vigilant and reinforce the importance of integrity within the workplace. By combining these proactive measures with a vigilant eye on employee behavior and fostering a positive work environment built on trust and accountability, businesses can significantly reduce the risk of employee theft without solely relying on surveillance and monitoring.

What are the psychological or social factors that might contribute to employee theft in the workplace?

Employee theft can be driven by various factors, including financial need or greed, the simplicity of the act due to weak controls, or resentment towards the employer. Employees might steal because they face unexpected bills, suffer from addictions, or experience financial hardship.

Theft can also occur when employees perceive it as easy due to inadequate oversight or feel undervalued, leading to resentment and a belief that they deserve more. Making employees feel valued, recognizing their accomplishments, and offering competitive pay can mitigate these motivations.

How do the impacts of employee theft extend beyond financial losses to affect workplace culture and employee morale?

The impacts of employee theft extend well beyond immediate financial losses, potentially eroding trust within the workplace, leading to an atmosphere of suspicion and decreased morale. The knowledge that colleagues are stealing can demotivate honest employees and create a toxic work environment.

In the long term, this can affect employee retention, productivity, and the overall culture of the organization. Preventing theft through a combination of surveillance, ethical hiring practices, and fostering a positive work environment can help maintain a healthy workplace culture.

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