Study Finds Retail Employee Theft on the Rise

pointing to computer screen

You may have heard that crime rates have gone down in the past couple decades, but recent results from an annual survey on retail employee theft, performed by Jack Hayes International, may debunk such wishful thinking.

The survey found that internal employee theft rose sharply in 2012 as compared to previous years, with an estimated one out of 40 employees caught stealing from their employer. Although employers recovered over $50 million from the 71,095 employees they apprehended, no one knows how many thefts were not detected. The study also shows that shoplifting increased sharply.

Although we cannot know the motives of each and every thief, there are some plausible reasons for the increases in these crimes rooted in our economic conditions and culture:

  • The economy is only slowly improving, and pay is not keeping pace with the increased cost of living. Many thieves manage to justify their crimes by blaming society or their employer for not valuing them enough, or by some other rationalization.
  • Many retailers have inadequate employment screening programs. To lower costs, many of them have reduced or simplified screening procedures, and in the end, hiring more people who commit these crimes.
  • In-store surveillance has been reduced by many retailers as a cost-cutting move, making it easier for both employee and shoplifter to steal.
  • The rapid growth of online auction or sales outlets has provided an easy and quick way for thieves to “fence” stolen goods.

Crimes involving employee theft are believed to be on the rise despite the overall decline in crime. And the increased cost of living and loosening cultural restraints on the thieves (sociologists call this “social control”) have combined to make the problem even worse.

Preventing Employee Theft

Retailers know they will never eradicate internal theft or shoplifting entirely, but they do need to make aggressive efforts to prevent the growth of the crimes.  Our corporate parent, Lowers Risk Group, has published some general suggestions for enterprise risk management regarding fraud. Some of the most important tactics include:

  • Setting the “tone from the top.” Nearly every story we read about occupational fraud or theft comes to this same conclusion. Companies need to have a transparent and clearly communicated stand for honesty and trust in the workplace. Leaders in the C-suite will promote these values by living them.
  • Use of background checks to make better hiring decisions. Like all businesses, retailers are urgedto carefully vet their employees, while also ensuring the organization’s screening policies are compliant with applicable laws.
  • Adequate internal controls. In the retail environment these might include physical factors as well as audits or process design, e.g., supervisory oversight.

Based on the factors underlying the growth of retail theft, it is plausible that the number of people who commit theft will continue to increase. In other words, new retail employees will include people who are susceptible unless retailers can make better hiring decisions in the first place. A sophisticated and legally compliant employment screening program is one tactic that can help keep the lid on this crime. Let us help you plan your approach.  Request a consultation.

About Michael Gaul

A security industry professional since 1988, Michael has extensive expertise in the fields of human capital risk management, physical security, and background screening process management. Michael leads Proforma’s sales, marketing, and strategic customer relations efforts.


View all posts by Michael Gaul →