CASH REFUND FRAUD

CASH REFUND FRAUD


BACKGROUND

1. One of the most common method of cashier’s fraud in Retail Industry is ‘Refund Transaction’. This methodology causes double loss to the company. First, it causes ‘Shrink’ as the item billed in return sales, does not physically get back to store and secondly, it causes cash loss, as the cost of item billed in reverse sale gets pocketed by the dishonest cashier.

2. Various cashiers have been using different methodology to carry out this fraud. However, each such cashier shall have distinct signatures of his actions – something like – generally, all criminals have an identifiable modus operandi.

METHODOLOGY OF COMMITTING CASH REFUND FRAUDS


3. Article Selection. Generally a dishonest cashier will generally select a few items for which he or she would carry out refunds for his / her personal gains. Such articles are generally the ones whose prices are in rounded off figure like Rs 80/-, Rs 299/- etc. This is required for the simple reason to keep the account simple. If a cashier selects low value item, he / she might have to carryout refunds very frequently, thereby, exposing him / her to risk of being detected. If the article is of high value, the same might attract store management attention to that because chances of detecting missing high value SKUs are more as compared to mid level priced SKU (above example is applicable more to general retailer rather than a brand retailer who might have SKUs of high value.

4. Over a period of time, cashiers get used to carrying out fraudulent refunds of particular group of SKUs. Each such cashier develops a liking for particular SKU because it becomes easier for him / her to remember the bar code and price. If he has spared some shelf edge labels, then he would continue to use the same.

5. Timing The timing to effect such transaction is very crucial. It shall be generally done in one of the following time line :-

(a) At a time when footfall is low at store. In other words, when cahiers have time to themselves.
(b) At a time nearing the opening of shift or towards the end of shift. This is for the reason that they are about to tally the cash and cash drawers would be open by default.

(c) If frequency of such transaction by a particular cashier is few and far between, then, he or she would execute this a day before his / her scheduled off day.

6. Cashier ID . Generally a dishonest cashier would use (steal) someone else’s ID to perpetuate this kind of fraud. This ID could be of some other cashier or that of Supervisor. Executing such transactions in someone’s else’s ID insulates the dishonest cashier (or so he / she thinks) against penalty in the event of transaction getting caught, as the dishonest cashier retains high degree of deniability.

Preventive / Detection Tools

7. The following are tested tools for preventing and detecting this kind of fraud :-

(a) Robust refund policy and ensure strict compliance to same.
(b) Carry out ‘pattern recognition’ of data available in data store house, infact, standarised reports can also be generated for users across the board.
(c) Carry out video analytics.
(d) Develop informers from amongst the honest employees. They should know whom to escalate such incidents.
(e) Appropriate password protection policy.