’Tis the season to be jolly, but not necessarily for retailers. Right through to February, retailers take on extra employees for holiday sales and returns, and not all are ideal. Some are actually thieves ready to pounce on your profits or steal your customers’ identities.

U.S. Retail Workers Are No. 1 in Employee Theft
According to an aptly titled article in Forbes, Anne Fisher states “U.S. Retail Workers are No. 1 in Employee Theft.” This is especially true during the busy holiday sales and returns period. Missing goods from shoplifting and other causes costs U.S. retailers about $42 billion per year, according to the Global Retail Theft Barometer, an annual industry study led by Ernie Deyle and inventory management firm Checkpoint Systems—and in the U.S., 43% of that lost (stolen) revenue is tracked to employees rather than shoplifters!

This percentage compares to only 28% worldwide. American retailers have reason to be very concerned regarding the integrity of the employees they hire.

Deyle, a 30-year veteran of retail loss prevention, says the most common theft happens during checkout, where an employee might manipulate a transaction to benefit themselves or someone else, e.g., entering refunds, discount, or voided transactions into a cash register, or canceling transactions, modifying prices, or saying someone used a coupon when they didn’t.

Interestingly Deyle states the reasons for this occurrence as “ineffective pre-employment screening, less employee supervision, and easy sale of stolen merchandise.”

Technology Makes Stealing Easy
Technology is making it easier for employees to steal. Smartphones with credit card readers are popular tools with thieves, making it easier to steal from anywhere rather than stealing in a structured environment with cameras watching. And online fraud schemes sometimes use physical “insiders” to help pull off their theft.

Popular Employee Theft Approaches
Shipping departments and collusion with “customer” partners in crime are also good places to look for employee theft. An LPM Insider article entitled “5 Ways Employees Are Stealing from Your Stores Right Now” cites two good examples. At a Dollar Store in South Carolina employees pretended to scan most items in shopping carts with the carts leaving with stolen merchandise that amounted to $56,000 over an eight-month period. At a Walmart in Pennsylvania a four-person theft ring stole $60,000 worth of merchandise by only ringing up inexpensive items from large orders.

Gift cards and pre-paid credit cards are also convenient ways for employees to steal. Employees issue them without paying for them and then accomplices can come in and “spend” hundreds of dollars.

And Then There’s Identity Theft!
Outright stealing of cash and merchandise is not the only crime retail employees can commit. Some are very adept at stealing the identities of your customers and benefitting that way. An article by Jonathan Stempel for Reuters, “Ringleader of Saks ID Theft Scheme Pleads Guilty,” illustrates how a woman stole Saks Fifth Avenue customer data to purchase nearly half a million dollars of goods. The woman provided coworkers with social security numbers, birth dates, and other personal information of 20 Saks cardholders. Some in the ring are serving prison terms. The ringleader’s fate is still to be decided.

Screen Before You Hire Your Retail Employees
Chris McGoey, a security expert, states that while there is no real physical profile for a dishonest employee, a person’s past conduct, integrity, and judgment often provide the best indication of their future behavior. He says that basic loss prevention steps involve good procedures for hiring, training, and supervision of employees and managers.

Nicole Leinbach-Reyhle is founder of Retail Minded, co-founder of the Independent Retailer Conference, and author of Retail 101: The Guide to Managing and Marketing Your Retail Business. She is also a contributor to Forbes where she lists an employee background check at the top of her list for minimizing employee theft in her article, “New Report Identifies U.S. Retailers Lose $60 Billion a Year, Employee Theft Top Concern.” She says that using suggestions recommended by the U.S. Small Business Administration may include credit reports, criminal record reports, school records, and workers’ compensation records.

The Hire Authority can help retailers screen employees properly and legally to minimize potential employee theft. Our company has the expertise and the experience to meet any employment screening need. Don’t try to do it yourself—most DIY or online screenings don’t succeed in doing a thorough job.

The Hire Authority can design a customized, affordable program for investigating and verifying information about new employees, so you can hire with confidence. After all, the smartest way to avoid trouble is not to hire that bad egg in the first place. If you are interested in an employment screening company, we’d be happy to answer all of your questions and give you a quote. Call (508) 230-5901 or visit our website www.hireauth.com.

The foregoing should not be construed as legal advice. Employers should always consult their own legal counsel for advice on labor and employment matters.