The pandemic has undoubtedly changed every aspect of the retail industry, and employee relationships are no exception. Unfortunately, employee fraud is on the rise as retail workers leave their jobs frequently and become more dependent on seasonal workers. In fact, according to the 2022 National Retail Security Survey conducted by the NRF and the Loss Prevention Research Council in partnership with Appriss Retail, 58.6% of retailers have seen an increase in employee theft since the start of the pandemic. I am reporting.
Fortunately, there are strategies that loss prevention teams can rely on to reduce the risk of internal theft and build a stronger workforce. But before these retail teams can prevent this unnecessary loss, they need to fully understand why employee fraud is on the rise and how this epidemic is hurting their business. I have.
Why employee fraud is on the rise
Historically, economic and social uncertainty has led to increased crime, fraud and abuse. So it’s no surprise that these problems are magnified in today’s climate. Consumers are now facing a looming recession, the lingering impact of his COVID-19 pandemic, and recent layoffs in many industries. All these factors contribute to a difficult employment landscape for retailers and increase the potential for fraud.
But despite these factors, retailers are looking to hire new employees quickly to make up for labor shortages. In fact, a new survey from Forrester and Workjam found earlier this year that 63% of retailers were experiencing losses to their frontline teams.
To offset this deficit, many retailers have been forced to hire short-term or seasonal employees and introduce them to stores with less training than in years past. Less connected to the company, employees are more likely to commit costly errors and fraud in time. and offers yet another incentive for fraud.
Various Forms of Employee Fraud
Employee fraud can occur in many ways. For example, unintended fraud by an employee can result from a cashier error. Another common type of employee fraud is “indulgence.” This happens when employees give discounts or free items to friends and family.
Other examples of employee fraud include:
- street delivery scam
- point scam
- Price match and markdown fraud
- Employee Refund Scam
- cash theft
- Product theft
- Deliveryman theft
- inventory operations
- Collusion with internal and external collaborators
Regardless of the type of fraud committed or the intent, these acts undermine profitability and can create a domino effect among other employees if a colleague succeeds in the attempt. To combat this, it is critical that loss prevention teams invest in strategies to mitigate fraud and improve employee relationships.
How Retailers Stop Employee Cheating
So how can retailers stop fraud? In the case of unintentional fraud, the solution could be more training and regular retraining based on performance metrics.
However, for more advanced forms of employee fraud, retailers can rely on AI to detect anomalous behavior and recommend courses of action. Exception-based reporting (EBR) uses advanced data analytics to review large volumes of transactions and detect anomalies. This will trigger either a warning for the first issue or the termination of an employee who has a reoccurring issue.
When combined with AI/ML models, EBR systems can detect anomalies in cashier behavior and store performance to identify many more types of fraud, shrinkage, and margin issues. Over time, your recommendations will become more accurate and more efficient for your loss prevention team. AI can also automatically perform next-step analysis, bringing consistency to the investigation and resolution process.
The impact of AI-driven EBR is powerful. By adopting a data-driven approach, retailers are alerted to more fraud cases, reducing case investigation time and reducing the window in which bad actors can impact revenue. will be In the future, new applications of AI, such as generative AI, will help build case narratives and video analytics that can be used as additional data points to increase the value of EBR solutions.
The Importance of Protecting Your Business
No stone should be left when it comes to fraud. Retailers need to protect their business from the ground up by using data and analytics to catch all fraudulent activity. In doing so, retailers can strengthen employee trust and relationships, increase profitability, and achieve long-term success.
Dr. Vishal Patel is Chief Technology Officer for Appriss Retail. In this role, he is responsible for all engineering functions, building and supporting the product suite, and helping Appriss Retail bring new products to market to better serve its customers. He has over 10 years of software and programming experience using a variety of technologies his stack, database his solutions, and cloud his providers. Previously, he was Director of Science R&D at Appriss Data, responsible for building and deploying data applications and machine learning models for retail customers, Appriss Health and Appriss Insights customers.
