Tackling Fraud and Theft in Wireless Retail: Nine Key Risks and Solutions

Did you know that 10% of wireless store employees are responsible for 95% of employee fraud and theft? That’s an average of one in 10 of your staff who you can expect to commit some kind of fraud against your business.

It’s an alarming figure. Added to that are the threats from outside your operations — thieves posing as customers, burglary, robbery, credit mules, and organized criminals, to name a few. The losses your wireless retail business faces could be substantial.

However, for as many threats as your business faces, there are more preventive measures and solutions to tackle them. These are outlined in our two-part whitepaper, Fraud and Theft in Wireless Retail: Key Risks and their Solutions. Part 1 deals with employee risks, while Part 2 delves into external threats.

Below is a summary of the nine key fraud and theft risks and their solutions, which are examined in more detail in our two-part whitepaper.

Employee Fraud and Theft

Refund and trade-in fraud

Risks:

• Refund fraud is considered easy pickings
• Simple for an employee to time transactions for least risk of discovery
• Non-stocked SKUs are at particular risk as there is no physical inventory
• Trade-in fraud is another method of refund fraud that is easy to commit

Solutions:

• Undertake robust refund audits
• Check for patterns of refunds
• Look out for anomalous refund percentages
• Call the customer to check a refund was issued
• Run regular trade-in reports

Physical inventory theft

Risks:

• Wireless retail stores stock high-value, desirable products
• One stolen phone takes another five phone sales (at least) to pay for that loss
• Having the same person counting inventory in and out poses a risk
• Employees can fake continual product stock transfers to disguise a theft

Solutions:

• Make sure you have efficient inventory management systems and processes
• Conduct blind inventory counts
• Conduct occasional surprise audits
• Regularly check your inventory transfer reports

Fraudulent discounting

Risks:

• Overuse of employee discount benefits
• Employees ​“sweethearting” products to friends and family
• Employees applying heavy discounting to enable a sale
• Employees falsely selling financing plans

Solutions:

• Conduct regular discount report audits
• Check for patterns of discounting among associates
• Use manager overrides in your point of sale
• Have a clear policy on employee discounts

Commission/​contest fraud

Risks:

• Employees inflating commissions to win prize contests
• Inflation of employee sales to increase commissions
• Handset protection programs are an easy target

Solutions:

• Regularly audit commission reports
• Spot-check commission-generating line items
• Monitor high commission earners
• Watch out for spikes, such as at the end of the month, and anomalies

Time clock fraud, AKA ​“buddy punching”

Risks:

• Employees punching in colleagues who are not at work
• Associate left alone in a busy store
• Retailers suffer lost payroll
• Retailers also suffer lost sales due to store lines

Solutions:

• Apply clocking-in settings in your RMS
• Require fingerprint logins, not just passcodes
• Set a clear policy about buddy punching

External Fraud and Theft

Opportunistic ​“grab and go” theft

Risks:

• Wireless retail stores are a particularly high target
• Store associate is distracted
• Thief grabs any available item
• Loss of high-value products

Solutions:

• Reduce real devices in-store
• Use dummy devices for demo purposes, or those that can only connect to WiFi
• Use a GPS tracker in real devices
• Attach robust cables to devices
• Make store less appealing/​accessible

Robbery and burglary

Risks:

• High-value, desirable products
• Risk higher in urban locations
• Burglary risk outside store hours
• Armed robbery also causes trauma

Solutions:

• Install security cameras — real or dummy
• Install a panic button under the counter
• Use a GPS tracker in a stocked device that is triggered when removed
• Allot burglary/​robbery risk points to store locations to decide on relative security measures
• For high-risk stores and locations, invest in high-level measures e.g. steel-encased stock rooms

Organized crime

Risks:

• Criminals coming into the store and posing as corporate staff, usually from IT
• Criminals logging into POS to buy products and ship them
• Malware uploads from emails or directly loaded into POS
• Store associates recruited by crime rings to steal on their behalf

Solutions:

• Require employee badges with unique IDs
• Demand security checks
• Use an RMS with an automatic logout
• Implement security training for managers and associates

Credit card and financing fraud

Risks:

• Stolen credit cards used in transactions
• Fraudulent credit card claims against purchases
• Exploitation of financing programs
• Identity thieves with robust ​“proof” of ID

Solutions:

• Don’t allow for manual credit card number entry
• Validate every credit card purchase with ID
• Implement robust application protocols for financing programs
• Implement credit card fraud training for store managers and associates
  
  

Considering the extent of the crimes being perpetrated both internally and externally, and the value of the products at stake, crime-related losses to telecom retailers can be huge. However, using the solutions, tools, and techniques detailed in both parts of our whitepaper, many of these losses can be prevented. Check out Fraud and Theft in Wireless Retail: Part 1 and Part 2 by clicking the links below.