Loss Prevention Trainer Material

Loss Preventiontraining MateriaL

Loss Prevention Training Material 3

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IntroductIonWelcome to the Retail Institute’s Loss Prevention Training Material.

How to use the training material

The training materials provide background information to support Level 3 trainees in completing their workbook and help trainers support trainees completing Loss Prevention for Frontline Staff.

The training material is arranged in three sections:

Section 1: Theft and Fraud

Section 2: Security Systems

Section 3: Process Loss

It contains loss prevention information, case studies and examples. There is also the glossaries of loss prevention words and their meanings.

You should find the training material based upon the resources, Loss Prevention for Frontline Staff (Level 2) and the Loss Prevention for Supervisors and Managers (Level 3) particularly useful if you do not have a loss prevention officer in the workplace.

Icons

The following icons have been used in this workbook. Outlined below is an explanation of what the icons mean.

This icon identifies an example and explains how something applies in a real workplace situation.

This icon gives you a hot tip.

This icon tells you there is a key point to remember.

This icon lets you know there is more information on this subject in another section or training resource.

This icon indicates an activity for you to do. The activities do not form part of the assessment but will help to reinforce your learning.

Copyright © 2010 Retail Institute4

the continuous-improvement model of loss prevention

The training material follows a continuous-improvement model of loss prevention. This describes five steps that guide learners towards an understanding of loss prevention.

Read the model carefully so you understand it.

Step 1: Inform

You need to have all the relevant loss prevention information, policies and procedures available. Only if you are up to date and aware of current loss prevention information can you pass on this information to your staff. You need this information to move to the next step.

Step 2: Communicate

Communicate loss prevention policies and procedures to staff in a clear and understandable way. Information is only useful if it helps you train your staff.

Step 3: Implement

‘Implement’ means to put into practice what you know. Following existing loss prevention policies and procedures when you work is a sure way to do your work properly.

Step 4: Monitor

Collect information about the effectiveness of policies and procedures.

Step 5: Examine

Look over the information you have gained by monitoring, and identify ways of improving the policies and procedures. Make suggestions or recommendations to better implement the policies and procedures.


theft and fraud Read this section of the training material for information and descriptions of loss prevention policies for theft and fraud, so you can better:

1 inform

1 communicate

1 implement

1 monitor

1 examine.

Impact of theft and fraud on business

Theft and fraud can decimate retail profit margins. Unfortunately, it is not just customers but also staff who steal from the workplace. A business can feel the impact of theft and fraud through the loss of money, sales, products and customers.

how theft and fraud can hurt a retail business

Customers steal because:

1 employees don’t have the knowledge or systems to prevent theft

1 employees don’t have the confidence to ‘intervene’ in situations of suspected or witnessed customer theft

1 employees are unaware of how much theft impacts on the store’s profitability (and indirectly, on them)

1 thieves are aware of the low risk of being caught in stores with weak or non-existent loss prevention systems.

Delivery and service people commit theft and fraud because they:

1 know staff don’t have the knowledge or systems to prevent it

1 know staff are generally over-trusting of delivery/service people and so may not supervise them adequately

1 know staff may not be given sufficient instructions to properly receive or count inwards goods, check for shortlanding, damages, incorrect orders and so on

1 involve store staff in their schemes.

A store will also suffer losses when staff deliberately:

1 damage or write off stock so they can buy it themselves at a lower cost

1 alter records or do not keep accurate records

1 use incorrect procedures.

SECtIon 1


The store then becomes an unpleasant place to work, because:

1 everyone is suspicious – the identity of the culprits is not known

1 there is conflict between staff who steal and those who don’t

1 staff are afraid of reporting their suspicions

1 staff become anxious about the fate of the business.

Information about theft and fraud

definitions

theft is defined by law in the Crimes Act 1961 Part 10: Section 219, as two types of acts:

1 dishonestly and without claim of right, taking any property with intent to deprive any owner permanently of that property or of any interest in that property

1 dishonestly and without claim of right, using or dealing with any property with intent to deprive any owner permanently of that property or of any interest in that property after obtaining possession of, or control over, the property in whatever manner.

To simplify, theft or stealing is:

1 taking money or property that doesn’t belong to you, and not paying for it or giving it back.

Fraud occurs when someone deliberately lies about something, or cheats for financial gain. Fraud usually involves deception.

Examples of fraud:

1 using someone’s credit card or cheque without their knowledge

1 making a false claim on an insurance policy

1 cheating someone in a scam

1 using false documents such as invoices and sales dockets.

Staff fraud: The term ‘staff fraud’ is defined by J. Hinds in Tackling Staff Fraud and Dishonesty as:

...when an individual dishonestly makes a false representation, wrongfully fails to disclose information or abuses a position of trust, with the intent to make a gain or to cause a loss, while undertaking duties for an organisation with which they have a contractual arrangement to provide personal services.

We can summarise this as:

1 Staff fraud is dishonest action by staff to obtain a benefit by deception.


how theft and fraud occurs

Read below the many different ways theft and fraud can occur:

Customer theft Customer fraud

1 grazing

1 grab-and-run

1 simply walking out with goods in plain sight

1 switching price tags

1 ‘old for new’ – switching used/empty product for identical new one

1 putting on items

1 concealing (by switching packaging, palming, using hooks sewn inside clothing, or using a booster bag or box)

1 working with other shoplifters (by blocking or creating a distraction)

1 wearing stolen clothing under outerwear

1 pretending to be senile

1 using children to steal.

1 dishonest returns and exchanges

1 cheque fraud

1 EFTPOS fraud

1 credit-card fraud

1 stolen/counterfeit travellers cheques

1 price switching

1 switching packaging

1 affixing counterfeit bar-codes

1 internet fraud.

staff theft staff fraud

1 cash handling

1 taking products and concealing them

1 bagging or loading items intentionally not rung up ( for any reason)

1 collusion with deliverers/reps/outsiders, other staff, or friends/family

1 ‘allowing’ friends or family to shoplift

1 taking store equipment

1 grazing – use and consumption

1 time theft.

1 sweethearting

1 not accounting for inwards goods

1 deliberately altering records

1 dishonest purchasing

1 abuse of buying privileges

1 unauthorised discounting/mark-downs

1 refund/exchange fraud

1 deliberate damage

1 computer fraud

1 gift voucher fraud

1 switching goods on layby for friends

1 manipulating voids/line deletes

1 faked sales in ‘training mode’.ContInuEd on nEXt PagE


theft Committed by visitors, suppliers and delivery people

fraud Committed by visitors, suppliers and delivery people

1 deliberate shortlanding by people in warehouse or distribution centre

1 taking products while in transit – before they arrive in store

1 stealing stock from stores they are visiting

1 stealing equipment from stores they are visiting

1 stealing cash/vouchers from store office

1 allowing unsupervised visitors in stock/staff-only areas, for example, former employees.

Suppliers

1 using altered or incorrect paperwork to disguise shortfall of goods

1 charging a higher than agreed-on price

1 reps cheating/stealing on product swapovers or credits

1 reps deliberately over-supplying, for example, when on a commission basis

1 deliberately supplying sub-standard goods

1 overcharging on weight/freight.

delivery people

1 removing new stock from shelves and recording it as dated stock

1 presenting previously credited stock as new stock

1 altering prices on delivery documents where payment is made in cash

1 altering quantities on delivery documents and keeping stock not delivered

1 having a second blank invoice under the original you sign off on.


customer theft

Make yourself familiar with the main forms of customer theft, so you can ensure you have good loss prevention systems in place. Unless you recognise the most common forms of customer theft, you can’t prevent it.

Below are some methods customers use to commit theft:

Concealing stolen products

1 hiding an item in a container, such as in an umbrella, pram, bag, briefcase or coat

1 disguising an item as something else (such as putting on clothes, sunglasses, jewellery or shoes in the shop) and leaving the store pretending they came in wearing them. Customers could also put items in another store’s packaging or attach a price tag from another store

1 palming – hiding an item in the palm of the hand

1 using hooks sewn inside a coat, jacket, or loose, baggy trousers

1 using a ‘booster’ bag or box – a bag or box lined with tin foil to carry stolen tagged items. The foil lining blocks the signal between the tag and the door sensor

1 in fitting rooms – concealing stolen clothes (such as T-shirts and lingerie) under outerwear.

Walking or running out of the store with stolen products (shoplifting)

1 grabbing and running – taking items or money from the till and running away

1 walking out with products in plain sight – boldness and confidence often succeed

1 ‘trading in’ – switching old/used empty product for new, for example, running shoes or sunglasses.

Working with others to steal

1 distraction – one person distracts staff while the other takes the items

1 blocking – one person blocks the view of what the other is doing (often pretending to examine some large item)

1 children – some people get children to do the stealing, because under-15s are not prosecuted

1 pretending they are senile – ‘seniors’ can steal too (often in pairs), but if caught they may fake disorientation or confusion.

grazing

1 eating or drinking products in the store without paying for them

1 using items such as sunscreen, body lotion and mouthwash in the store.


customer fraud

Fraud is when someone deliberately lies or cheats to gain something of value. Below are some methods customers use to commit fraud:

Refund fraud

1 A customer returns goods they have not paid for – the goods may have been stolen previously or just picked up off the shelf a few minutes before.

Credit card or cheque fraud

1 A customer uses a credit card or cheque that does not belong to them.

1 Staff, especially junior employees, are often shy or reluctant to ask customers for more or better ID or second signatures because of fear of offending the customer.

EFtPoS fraud

A customer has a ‘doctored’ card (or can manipulate some hand-held EFTPOS terminals), instructing the system to erase the current sale and print a meaningless ‘log-on’ slip (or a copy of the previous sale made).

travellers cheques fraud

A customer presents stolen or counterfeit Travellers cheques

Switching packaging and prices

1 switching price tags – swapping price tags on articles, to pay a lower price

1 switching packaging – putting an expensive item in the box that contained a cheaper model

1 counterfeit bar-codes – gluing a different bar-code over the code of a more costly model (for example, power tools – a $200 code being affixed to the box of a $500 drill).

staff theft

Make yourself familiar with the main forms of staff theft, so you can ensure you have good loss prevention systems in place. Unless you recognise the most common forms of customer theft, you can’t prevent them.

Below are some methods staff use to commit theft:

Cash handling

1 direct theft of cash from register, till or petty-cash container

1 theft of cash through processing of fraudulent refunds

1 theft of cash from over-rings and under-rings

1 overcharging and short-changing of customers

1 manipulating of change-making between cashiers


1 failure to ring up sales – cashier doesn’t close cash drawer after each sale

1 stealing or altering gift vouchers or credited gift cards.

taking and concealing goods: When a staff member takes any goods for their own purpose without paying for them, they are stealing.

They may take the goods from the shop floor, the storeroom or deliveries. They may hide a product up their sleeve, under their top or in their bag. They may hide it in the rubbish and return to get it later. They may put the product with legitimate purchases, or with purchases made by an accomplice.

Collusion: This is when staff work together with customers, friends or other employees to steal from the store.

taking store equipment for personal use: This is when staff use work equipment such as office or computer supplies, cleaning materials or even store vouchers for their own personal use.

use and consumption: When a staff member eats, drinks or uses goods belonging to the store, they are stealing. This is also called grazing. It can cost the store a considerable amount in lost sales over time.

time theft: Manipulating of time-cards/records, false claims of timeworked and engaging in personal pursuits on company time are also considered forms of theft.

staff fraud

Below are some methods staff use to commit fraud.

Sweethearting: ‘Sweethearting’ – also known as ‘unauthorised discounting’ – is theft by collusion between a staff member and a customer. It most often occurs at the till/checkout – between a sales assistant or checkout operator and a family member or friend. The staff member gives the customer more product than they paid for, or charges a cheaper price for the product than the cost price.

‘Give-aways’ are also theft. Staff may give ‘freebies’ to friends, or even just not charge some customers because they ‘feel sorry’ for them for some reason.

Falsifying documents: This is when a staff member doesn’t account for inward goods but keeps them and pretends that the store never received them.

Falsifying documents can also be when a staff member alters stock records in order to steal stock during or after a stocktake.

‘False diversion’ of cash is when a employee takes (but manipulates) customer cash sales, then transfers that cash onto their own personal charge account, or onto a friend’s layby account.

Falsely or excessively stamping ‘loyalty cards’, or falsification of ‘gift/exchange cards’.

Staff purchases and abuse of buying privileges: Staff members may be dishonest about their sales transactions. They may enter incorrect data, such as purchases for $24.95 when they are really worth $54.95.

They may use their buying privileges for all their family and friends, which means the store is providing discounted prices for a number of people instead of just their staff members.


Refund fraud: Staff buy goods at discount prices and later return the goods for a full-priced refund at a different store.

Staff keep receipts from a previous sale and use these receipts to process refunds for themselves (or give them to friends and family who then enter, select the corresponding item, and are ‘granted refunds’).

Staff keep genuine receipts from actual customer sales, then buy the same item at staff discount – a friend later returns the item with the full-price receipt – so they ‘score’ the amount of the discount.

Staff create a fake EFTPOS refund, then swipe their own personal bank cards, transferring money directly from the store’s account into their own.

Identity fraud: Staff use a customer’s credit card or cheque details to access their account.

Staff use a customer’s personal and financial information to obtain goods and services over the internet.

ProactIve aPProaches to reducIng theft and fraud

The best way to reduce shop theft is by removing any opportunities for people to steal.

Proactive approaches to reducing customer theft and fraud include:

1 positive customer service

1 knowledge of the products you sell and the amount you have in the shop and storeroom

1 maintaining a higher level of security consciousness

1 knowledge of your store layout.

Positive customer service

This is one of the best ways you can put someone off stealing. You should:

1 greet customers as soon as they come into the store, even if you can’t serve them immediately – this tells them you have seen them and know they are in the store

1 offer to help customers find what they are looking for

1 maintain regular, friendly eye contact

1 serve customers in a position where you can see and scan the majority of the store interior and other customers

1 observe what bags, packs and other articles people bring into the store with them.


Product knowledge

You can help to reduce loss by knowing:

1 what products you sell

1 their prices

1 how much stock you have

1 the location of goods in your store.

For example, if you identify an empty space on the shelf and are confident the item has not been sold, then it has probably been stolen.

Store layout

Also useful for reducing theft and fraud is good store layout, such as:

1 wide aisles – making it easier for staff to see what customers are doing

1 clear aisles – removing opportunities for customers to hide their theft from view

1 unobstructed views of doors – allowing observation of entering/exiting customers, and what they are carrying (such as bags, merchandise from other stores and so on)

1 higher-risk merchandise – being kept in sight of sales staff

1 displays below eye level – making it possible for staff to see the whole store

1 reducing blind spots – helping staff to see all the areas in your shop (such as positioning an overhead mirror in an area with poor visibility)

1 channelling customer flow – using the store layout to guide customers through the store on a set path (such as entering through the produce section and leaving through the checkout).

Reduce staff theft and fraud

The best way to reduce staff theft is by building a culture of honesty and positive relationships. If staff feel good about their employer, manager and workmates, they are less likely to steal.

When staff feel they have an important part to play in loss prevention, they are more likely to help reduce theft and fraud.

There are many ways you can build this culture.

Employ the right people

Follow good recruitment policies and procedures. Emphasise the importance of selecting new staff with a record of honesty supported by genuine referees. Make sure you check the references of all staff, including casuals and part-timers, before you employ them.

Start at induction

Loss prevention should be an important part of your induction programme. All new employees need to be aware of the store’s loss prevention policies and procedures as well as the employee code of conduct.


Signs and accessibility

Have clear, well-written and accessible policies and procedures on display throughout the store.

Regular communication

It is important to communicate policies and procedures to all staff regularly, to keep them fully informed and up to date. You should complement this by revisiting staff training, to raise security awareness and clarify procedures and rules.

By raising staff awareness of loss prevention policies, you will prevent misunderstandings about what constitutes dishonesty in the workplace.

Ensure that staff know the ‘house rules’. These could include:

1 The employer has a ‘zero tolerance’ for theft, however minor.

1 The store has security operating and will detect internal dishonesty.

1 All staff are aware of the consequences if they are caught stealing.

1 All ‘perks’ of the job are clearly defined by management, with no ‘grey areas’.

1 A strict prosecution policy is in place for employee theft.

1 The store’s checks and controls aim to protect honest staff from suspicion because of the dishonest actions of others.

1 Good work and honesty are appreciated and rewarded.

Rewards

Many retailers offer incentives to their staff, such as staff discounts, to reduce the temptation to steal.

If you value your staff and support them with a caring atmosphere or culture, they are less likely to steal from the workplace.

Even those facing personal difficulties – such as debts, drugs, alcohol problems and family issues – are less likely to steal if they know their employer will support them through the tough times.

disciplinary process

Some employers avoid telling employees that their behaviour is unsatisfactory until the situation becomes critical. This is an unfair and ineffective way to address a performance issue.

When dealing with poor performance or misconduct, the employer must ensure that the employee is properly trained and given every opportunity to correct poor habits or behaviour. And you should do this before starting any disciplinary action.

It is your responsibility to ensure that staff are trained to know and follow their store’s loss prevention policies and procedures. If the training is thorough and clearly documented, it should be easy to recognise when staff are not following policies and procedures.

Make sure new staff know what performance and conduct is expected of them. Then there will be no misunderstandings.

0800 486 738www.retailinstitute.org.nz

Copyright © Retail Institute

All rights reserved. No part of this publication may be reproduced in any form without prior written permission. Enquiries should be made to the Retail Institute, PO Box 24341, Wellington.

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Loss Prevention Trainer Material

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Transcript of Loss Prevention Trainer Material