Ethical Shoplifting - Retail Story
If you think risk of shrinkage in a retail outlet can be reduced completely with latest technological controls like bar codes, smart tags, RFID, Scanners, and CCTV together with tight physical security then you may probably need to rethink.
Ethical shoplifting is a fraud story of a food retail chain in Mumbai. The story has dramatic scenes of shop lifting and shop un-lifting and inventory leakage without physical goods moving out of the store. If you wonder how it is possible to have inventory leakage without physical goods moving out unethically and voids. Read more.
A year back, I was on an assignment for a retail giant at their Lower Parel Office in Mumbai; one gentleman approached me and asked me if I am again on a hunt? I was surprised to hear the words and I felt that I have seen him earlier before.
I had managed to break traps of this Mr. Fraud when he was working with a renowned retail chain in Mumbai as a supervisor. Although he had changed his job since then to work with this biggest retail giant in Mumbai; he remembered me distinctly and how I had caught him and his tricks in the past. He was looking humble but cunning still.
This smart man has seen various store situations, peak time footfalls, power failures in stores, consumer disputes, and night times of cash counting etc. He had discovered around 10-12 tricks to earn Rs. 4000-5000 every day i.e. around 1% of the revenue of the store.
I am sharing one of his tricks here which is about ethical shoplifting/ un-lifting.
People leave articles at the cash counters before they settle their bills. They dont want to purchase may be. Even some times people return articles immediately after the same gets billed. People have disputed because they have been told to pay first and then return it at the sales return counter to get the money back. Many people paid less and left the articles at the counter. This is all about billing errors and mood changes of the customers. You cannot think what all happens at peak hour at a food retail hypermarket in crowded urban city like Mumbai and when customer service is your motto.
Duplicate bills. If you are a Retailer, I am 150% sure that use of duplicate invoices are not getting tracked properly in your store. I bet, just check back.
Mr. Fraud with his one favorite cashier had done the trick. They were managed to print duplicate bills on basis of which they picked up articles from the racks inside the store to send to the sales return counter as if articles were left behind by the customers after they have been billed but for which no collection could have been made.
The sales return counter had seen such situations and disputes with customers earlier. So, he could easily believe the circumstances. He could not perceive a risk because it never involved GIVING as no cash refund involved at the outset. Moreover he received the article which needed to go back on the racks after the due procedures. Mr Fraud, who was a supervisor un-lifted the lifted material at the sale return counter with the duplicate bill which had the sale of the article.
The cashier removed that much cash from the sales. At time of final cash reconciliation short cash got adjusted for the sales return. No one ever questioned the inter-counter cash adjustments between cash counter and sales return counter as there was a physical material present in view which got un-lifted at the counter some hours back in the good spirits. At night every body wants to go home. In morning, all controls are paper works and you will never know what had happened last day.
If you doubt that with strong physical control no cashiers can take cash out of the store, then mind your thought as it is the easiest of all. You can have hundreds of secret pockets and baskets in which cash can go out. NO POCKET policy is a flop. I could catch this trick of his and his other 12 tricks because I had an idea of some thing called THREADS. THREADS are always there.
My next study is on Just in Time (JIT) Inventory Method Blunder. This is not a fraud story but incorrect application of JIT.
After this, I want to write on ENRON & BOW-FORCE. I know you will like to know in brief how SOX had taken birth to take away millions of dollars from the corporate world and it is unfortunate that the situation is still the same and chances of corporate frauds have never reduced at all.
Nowadays many want to look SOX as a process improvement tool rather than Fraud Prevention Assurance Tool. I bet; all big minds have again missed it completely and ethically justifying higher controlling costs.
Bye for now.
Ethical shoplifting is a fraud story of a food retail chain in Mumbai. The story has dramatic scenes of shop lifting and shop un-lifting and inventory leakage without physical goods moving out of the store. If you wonder how it is possible to have inventory leakage without physical goods moving out unethically and voids. Read more.
A year back, I was on an assignment for a retail giant at their Lower Parel Office in Mumbai; one gentleman approached me and asked me if I am again on a hunt? I was surprised to hear the words and I felt that I have seen him earlier before.
I had managed to break traps of this Mr. Fraud when he was working with a renowned retail chain in Mumbai as a supervisor. Although he had changed his job since then to work with this biggest retail giant in Mumbai; he remembered me distinctly and how I had caught him and his tricks in the past. He was looking humble but cunning still.
This smart man has seen various store situations, peak time footfalls, power failures in stores, consumer disputes, and night times of cash counting etc. He had discovered around 10-12 tricks to earn Rs. 4000-5000 every day i.e. around 1% of the revenue of the store.
I am sharing one of his tricks here which is about ethical shoplifting/ un-lifting.
People leave articles at the cash counters before they settle their bills. They dont want to purchase may be. Even some times people return articles immediately after the same gets billed. People have disputed because they have been told to pay first and then return it at the sales return counter to get the money back. Many people paid less and left the articles at the counter. This is all about billing errors and mood changes of the customers. You cannot think what all happens at peak hour at a food retail hypermarket in crowded urban city like Mumbai and when customer service is your motto.
Duplicate bills. If you are a Retailer, I am 150% sure that use of duplicate invoices are not getting tracked properly in your store. I bet, just check back.
Mr. Fraud with his one favorite cashier had done the trick. They were managed to print duplicate bills on basis of which they picked up articles from the racks inside the store to send to the sales return counter as if articles were left behind by the customers after they have been billed but for which no collection could have been made.
The sales return counter had seen such situations and disputes with customers earlier. So, he could easily believe the circumstances. He could not perceive a risk because it never involved GIVING as no cash refund involved at the outset. Moreover he received the article which needed to go back on the racks after the due procedures. Mr Fraud, who was a supervisor un-lifted the lifted material at the sale return counter with the duplicate bill which had the sale of the article.
The cashier removed that much cash from the sales. At time of final cash reconciliation short cash got adjusted for the sales return. No one ever questioned the inter-counter cash adjustments between cash counter and sales return counter as there was a physical material present in view which got un-lifted at the counter some hours back in the good spirits. At night every body wants to go home. In morning, all controls are paper works and you will never know what had happened last day.
If you doubt that with strong physical control no cashiers can take cash out of the store, then mind your thought as it is the easiest of all. You can have hundreds of secret pockets and baskets in which cash can go out. NO POCKET policy is a flop. I could catch this trick of his and his other 12 tricks because I had an idea of some thing called THREADS. THREADS are always there.
My next study is on Just in Time (JIT) Inventory Method Blunder. This is not a fraud story but incorrect application of JIT.
After this, I want to write on ENRON & BOW-FORCE. I know you will like to know in brief how SOX had taken birth to take away millions of dollars from the corporate world and it is unfortunate that the situation is still the same and chances of corporate frauds have never reduced at all.
Nowadays many want to look SOX as a process improvement tool rather than Fraud Prevention Assurance Tool. I bet; all big minds have again missed it completely and ethically justifying higher controlling costs.
Bye for now.
Labels: Fraud Stories, Internal Control, Retail
posted by Narayan Mantri at
1:05 PM
1 Comments:
amazing article!!
Post a Comment
Links to this post:
Create a Link
<< Home