You’re coming up on the busiest retail time of the year—and you’re prepared. Your stock is ordered, your staff is ready, and your sales goals are clear. You’ve planned for everything—but have you planned for fraud prevention?
Unfortunately, it’s an issue every business owner must face—but with some of these tips, you’ll be in a situation to prevent fraud, rather than deal with its aftermath.
Hire the right staff
In the fight against fraud, your staff is on the frontlines. Unfortunately, sometimes that means your people can be the ones stealing. We’ve spoken a lot about hiring slow and firing fast. You can prevent retail theft, and get the right people in the door by instilling a sense of ownership and pride in their job—and letting them share in on the profits if sales goals are met. If you incentivize job performance, there will be less desire to take from you. You can instill ownership in the role, by advocating and encouraging (and even incentivizing) fraud prevention. Actively reward your employees who prevent theft whether through identifying holes in your strategy, or actively stopping a theft in progress. However, this should never involve physically confronting someone suspected of theft. Please get the authorities involved, as you do not want to put you or your staff in any potential situation where it could escalate and put you in harm’s way.
Carefully monitor your promotions
Coupon fraud has been on the rise in recent years, and nothing will hit your bottom line more than fulfilling more BoGo offers than you had budgeted for. You can prevent coupon fraud through personalization of your coupon, and limit how it is delivered. If your bottom line can’t support over a certain number of fulfillments on a coupon—do not email it to your customers. It will be easily forwarded, immediately taking you out of a position of control. Depending upon your customer base, you may want to tie coupon fulfillment through a customer’s email address, or in your own customer database. That will keep people from fulfilling multiple times on an offer that was intended for one use only.
Set a date limit on returns
“Wardrobing” is where a customer will buy a product, use it, then return it, in effect renting the item for its use. You can combat this practice by setting a strict time limit on your returns. Explicitly state that items must be returned in the same condition that it was bought. Additionally, if you sell clothing items, place your tags on clothes in a manner that the tags cannot be tucked away unseen. Additionally, make your return policy contingent upon the tag being attached to the clothes. Be aware that it is easy to buy a tagging gun on the internet for very cheap—you can combat the savvier “wardrobers” by using an unusual tag color, instead of the usual white, to tag your merchandise. Chances are, if someone has gone through the hassle to purchase a tagging gun off the internet, they may not have bothered to buy tags in every color as well.
Also be sure to keep a log of your customer returns—it will allow you to see if someone is making more returns than average, which can be an indicator of fraud.
Generate a strong relationship with your local police officers
Having a strong relationship with your local police community can help you identify local repeat offenders and organized gangs as they continue to be the primary causes of retail theft. To add extra security for your store, you should consider installing anti-theft equipment like CCTV as it has become more affordable. Most independent retailers are targeted because they didn’t have CCTV, however, having a simple signage warning people that this store is equipped with CCTV and that shoplifters will be prosecuted is a very helpful deterrent.
Keep your store neat and tidy
This isn’t a catch-all solution—but it helps. Keep your store clean and tidy, and your view unobstructed. It will be easier to spot potential fraud in your store, and also make it easier to find merchandise. Also be sure to rip up receipts if your customers don’t want them—there’s a scam some run where they get their hands on a receipt not their own, then pick up the item in-store, then walk to the register and return the item—pocketing the cash or store credit.
Be sure to regularly empty your trash around your store—the same receipt trick can be used by digging through your garbage, where customers regularly will throw away their receipts.
There is no one magic trick that will solve for retail fraud—but education and vigilance are the best solutions.