Employee fraud has always been a problem for the retail industry. And apparently “sweethearting” isn’t just a big deal around St.Valentine’s Day. The explosion of gifts cards has turned employee theft from a molehill into a mountain.
Employee fraud involving gift cards appears to be growing sharply. Even as total sales have been falling, employee theft and shoplifting have been rising across the United States. According to a leading national study, employee theft rose slightly that year to $15.5 billion. Overall theft is now estimated at $36 billion a year in the industry, or 1.51 percent of retail sales, according to the 2008 National Retail Security Survey.
The national study, based on information obtained from 106 retail chains that responded to a questionnaire, said employees were responsible for 43 percent of the stores’ unexplained losses, versus 36 percent for shoplifting.
The most common type of employee theft is “sweethearting,” in which cashiers fail to ring up or scan goods that friends or relatives present at the register. Stealing from the till remains a problem, too. But with gift cards continuing to grow in popularity, they are an increasingly easy target.
Whatever method employees use to steal, their take is more substantial than that of the average shoplifter. A global study of retail theft found that larcenous employees averaged $1,890 in theft, compared with $438 for shoplifters.
Read more about employee fraud.