According to the 2018 National Retail Security Survey (NRSS), inventory shrink accounted for 1.33% of retail sales, or $46.8 billion, in 2017. Retailers that participated in the 2017 NRSS say that employee/internal theft amounted to 33.2% of this inventory shrink.
Did you know? On average, if 1 iPhone 7 gets stolen from you, you would need to sell a minimum of six to break even!
That’s a lot of effort to make up for one lost item. What do you feel is your most common fraud hole? It’s important to understand where your sources of loss are coming from so you can prevent it in the future. Unfortunately, it’s most often from your own employees and processes.
Here are the top 3 fraud holes in the wireless industry as well as tips and tricks on avoiding them:
1. Employee Theft
Employee theft, also known as internal theft, is when employees steal inventory from the organization. This can be influenced when stores have little to no employee supervision or the ability for the staff to adjust items’ prices and enter fake coupons. Often times it’s the employees who feel disgruntled or like they aren’t being compensated fairly that will commit these acts.
- Regular inventory counts and reconciliation of inventory levels compared to sales.
- Watch for invoices where multiple phones were purchased with cash.
- Have employees perform bag checks before their fellow employees leave the store.
- Create employee satisfaction surveys to understand their needs and frustrations.
- Have regular performance reviews to ensure employees are compensated fairly or determine if commissions should be adjusted.
2. Refund Fraud
Refund fraud, the most common type of fraud, occurs when employees refund items that were not actually returned by the customer and pocket the money for themselves.
- Use a refund summary report to identify the employees with high amounts of cash refunds.
- Look for invoices with items sold into a negative quantity.
- Watch for multiple refunds with the same dollar values.
- Look at time stamps of invoices, particularly ones always early in the morning or late evening.
- Identify employees with a high volume of refunds under $50.
3. Time Card Theft
Employees can commit time card theft by exaggerating hours on their time sheets, punching in extra time, or getting their co-worker to punch-in for them (buddy punching). For example, if 5 employees clock 10 extra minutes each day, this adds up to 250 minutes per week. At $10/hour, that’s $40/week over pay and over $2,000 per year for just one location.
- Avoid manual tracking such as written papers or excel sheets, especially where people are likely to round time up. Ensure a manager is present when employees punch-in and out for their shifts or require a manager’s initials on time sheets.
- Implement a system to register hours such as bio-metric fingerprint scanners that are required for punch-in and punch-outs.
Fact! 1 in 4 American full-time employees have admitted to time theft.
A powerful cell phone store POS system can help with reporting and implementation of these loss prevention best practices.
Seeking new opportunities for generating revenue and creating a great experience for your customers is a challenge if you lack comprehensive and customizable retail software solutions. iQmetrix provides the software, integrations platform, and expertise necessary to bring your business lines together so you confidently implement your retail growth plan.