How to Prevent Employee Theft

How to Prevent Employee Theft

Over the past three years, employee theft has been a top reason for US retailer losses. According to Retail Knowledge, it accounted for 38% of all losses — or almost $23 billion in 2015. How can a convenience store or fuel station owner help prevent employee theft? Here are seven tips.


1. Implement high hiring standards

Carefully vet all employees during the hiring process. Begin with a complete background check, and call all of the provided references. Businesses can check public records to look for bankruptcies and criminal records without permission from the job applicant. To do a credit check, the potential employer needs permission first.


2. Train effectively

When on boarding new employees make procedures and policies clear for handling cash transactions, shift reporting, inventory processing and more. Make training comprehensive. Don’t expect a crash course in manning the register and stocking shelves to be enough.

When all employees are given consistent, clear training, store operations should run more smoothly. This will reduce opportunities for dishonesty and also make cash theft or failure to ring in sales stand out more.


To be effective, loss prevention systems must be designed to reduce the opportunity, desire, and motivation for employee theft. — Security expert Chris E. McGoey


3. Take control of inventory

Shrinkage is a problem for c-stores as well. After all, dishonest employees who might steal cash are likely also to pilfer merchandise. When inventory is quickly stocked on neat shelves or accounted for in an organized way in a neat backroom, it is more difficult for this activity to go unnoticed.

Integrating inventory management software also makes it easy to audit inventory, as well as safe and cash withdrawals.


4. Monitor activity

Auditing shift data, the owner can detect patterns such as similar amounts of sales and transactions always on the same day during the same shift and explore further. With some c-store softwares, an owner can even see every transaction in real-time (linked to the associate’s ID).


When fraud was uncovered through surveillance and monitoring or account reconciliation, the median loss and median duration of the schemes were lower than when the schemes were detected by police or by accidental discovery.— ACFE


5. Audit problem areas more often

Instant lottery tickets can prove tempting to the dishonest employee. Cigarettes are attractive for employees and customers to steal. Get ahead of the problem early by proactively auditing these inventories daily.

Performing random cash audits for every store employee, at least once a month, can also help control overage and shortages. 


Retailer inventory shirk averaged 1.28 percent of sales, or $45.2 billion in 2015, up $1.2 billion from 2014 — NRF


6. Get to know your staff

If employees only know owners as a voice on the phone or someone showing up at a store location once a month to audit cash drawers, there won’t be much of a personal relationship. Getting to know the staff will make the store a less likely target for any dishonesty. Plus, owners might be able to be proactive and help out when an employee is suffering financial difficulties, before they turn to theft.


7. Encourage accountability

Set up an anonymous reporting system and encourage employees to inform about suspected fraud. According to the Association of Certified Fraud Examiners, tips are the most common detection method. Nearly 40% of all cases were detected by a tip.


“Organizations that had reporting hotlines were much more likely to detect fraud through tips than organizations without hotlines (47.3% compared to 28.2%, respectively).” — ACFE


Employees are only one source of retail losses. According to a 2016 National Retail Federation study, customers account for 39% of retail loss. In fact, the report found a decrease in the average loss from dishonest employee cases, $1,546.83 to $1,233.77. Suppliers, contractors, management and administrative error were to blame for the remainder of retail losses.

Having a back office and inventory management system in place can help diagnose and prevent these thefts. With better business intelligence and the ability to efficiently and accurately get store overviews, the c-store or fuel station owner is more empowered in the face of employee or other types of theft.




ACEF. (2016). Report to the Nations on Occupational Fraud and Abuse: Executive Summary. http://www.acfe.com/rttn2016/about/executive-summary.aspx

McGoey, C. E. (n.d.). Employee theft. http://www.crimedoctor.com/employee_theft.htm

NRF. (2016, June 13). Retail Inventory Shrinkage Increased to $45.2 Billion in 2015. https://nrf.com/media/press-releases/retail-inventory-shrinkage-increased-452-billion-2015

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