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Shoplifting and internal theft prevention

Updated December 23, 2009

Shoplifters assume they won't be caught. Prove them wrong by following these tips.

Put a stop to shoplifting

  • Alert employees may be your best defense. Have them greet customers when they enter the store. Teach them to be attentive in a helping way. Make sure that all your employees are familiar with shoplifting laws in your state and establish procedures for them to follow if they suspect shoplifting.
  • Make sure you can see everything that goes on in your store. Keep counters low, no more than waist-high. Mount mirrors in corners so there are no blind spots.
  • Make it hard to leave your store without paying. Place expensive items in the center of the store, away from exits. Arrange counters and display tables so there's no direct route to the exit. Some stores put turnstiles at entrances so the only way to get out is through the checkout counter.
  • Arrange your displays so that missing items are easily noticed. Place small items in neat rows or patterns. If you must, fasten expensive merchandise and attach alarms. Reverse alternate hangers of hanging garments to prevent "grab and run."
  • Announce and observe a policy to prosecute shoplifters. The threat of being caught, questioned by police, put on trial and maybe even put in jail, may be enough to turn most shoplifters away. If someone ignores your warning, follow through. An empty threat is meaningless.

Common shoplifting methods

  • Bulky clothing, such as coats, pants, maternity outfits, are often used to hide merchandise.
  • Packages, bags, knapsacks and purses are good hiding places.
  • Special props include hollowed-out books, fake casts, umbrellas, secret pockets, belts or hooks under coats.
  • Folded newspapers or magazines are used to hide small and/or flat items.

What to watch for

  • Be aware of customers’ hands and their pockets, purses and handkerchiefs.
  • Notice open packages, purses, shopping bags and knapsacks.
  • Watch for customers who are nervous, have wandering eyes, or are loitering.
  • Watch groups of people, especially if one attempts to keep you distracted.

Employees are not exempt

Some experts believe that businesses lose more to employee theft than to burglary, robbery and shoplifting combined. Examine your management practices. Make your employees feel that they’ve got a stake in your business.

Embezzlement and pilferage

Sometimes employees only take a few items, like office supplies. Or they use company equipment, like cars or copying machines, for personal purposes. But embezzlement and pilferage can get a lot bigger. Cashiers may use "short ring ups" -- ringing up a lower price on the sales register to cover money they’ve taken from the till. Or they may overcharge customers and pocket the difference or undercharge other employees and friends. Embezzlement can go from simple overloading of expense accounts, to payments made to non-existent suppliers, to complicated juggling of the company books.

Watch out for these signals of embezzlement:

  • Records being rewritten so they’ll look "neater."
  • Inventory shortages increasing in size or frequency.
  • Employees refusing vacations or promotions.
  • Business patterns changing when a certain employee is absent.
  • Customers complaining about errors in monthly statements.
  • Collections declining.
  • Employees seeming sensitive to routine questions about procedures.

Inventory control

Unfortunately, there are many ways dishonest employees can cheat their employers. A cashier in a grocery store "accidentally" damages boxes and cans so she can buy them at reduced prices. A maintenance worker stashes office supplies like calculators and typewriters in trash bins. A stock clerk saves discarded customer receipts and uses them to show that stolen goods were "paid for."

Your best defense is frequent and thorough inventory control. Limit employees’ access to stock and inventory records. Occasionally check trash bins. Conduct periodic, unexpected inventory checks so dishonest employees know they run the risk of being caught by surprise.

Computer fraud

Many smaller companies are turning to computers for checkout, billing, inventory records and payroll. The technology may be new, but the crimes are the same—theft, larceny, embezzlement, fraud. Here are some tips to help protect your business from computer crooks:

  • Make sure your computer is programmed to reveal unauthorized use or program alterations.
  • Separate computer programmer and operator functions.
  • Minimize after-hours access to and use of the computer.
  • Make sure programs contain a statement of ownership.
  • Monitor and log all inputs and outputs.

Bribery and kickbacks

The employee who lets a business secret slip for a price. The loading supervisor who ignores a short order for a little fee. The contracting officer who’ll speed things up for a small present. These are all examples of bribery. It may not seem like a big problem at first. After all, who cares if somebody does a little favor for a business associate? But these little favors can mean big trouble.

Watch out for these warning signs:

  • Purchasing agents using one supplier despite a company policy of rotating suppliers.
  • Employees frequently associating with vendors or suppliers.
  • Employees receiving free tickets for sports events, shows, etc.
  • Reputable businesses refusing to submit bids.
  • One person having responsibility for issuing and approving bids.

To fight the problem, institute strong policies against accepting gifts, make sure employees require competitive bids, and rotate purchasing agents and suppliers.

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