As a retailer, you must be aware of various factors impacting your business. Falling victim to different types of fraud can leave you out of pocket, stressed, and, in the long run, at risk of losing your business, credibility, credit rating, and trust. And that’s not an enviable position to be in.
Understanding the various types of fraud is a crucial step in empowering yourself as a retailer. This post will delve into a few of the more common types of fraud, equipping you with the knowledge to safeguard your business proactively.
Chargeback Fraud
Chargeback fraud is when a customer commits what they think to be a minor but only dishonest crime by reporting that they did not receive an item or it arrived damaged and ask their payment provider to reverse the charges. Chargeback fraud can often be seen in multiple scenarios; a common one that is prevalent right now is people doing this via preloved websites, claiming the sender didn’t post the item or send the wrong things despite having received it.
This can be done to small businesses and major retailers alike and is common in cases where card-not-present payments are taken, i.e. when a customer pays via a website or over the phone. The consequences of chargeback fraud can be severe, leading to financial losses and potential damage to your business’s reputation. This article gives you more information on understanding card not present transactions and protecting yourself against fraudulent chargebacks.
Asset Misappropriation
This scam can cost retailers thousands and, in some cases, millions in revenue. Misappropriation entails accounts that don’t add up missing stock or things simply not arriving when they should. For example, you might notice discrepancies in your inventory records, with items missing or not matching the expected quantities.
Let’s say you’re looking to receive a shipment of 10 TVs to your store, but only 6 have been entered into the system despite the invoice saying 10 were delivered and signed for. This means that somewhere along the line, 4 TVs have been misappropriated. It could be direct at the source, and they haven’t made it into the shipment; the delivery driver hasn’t offloaded those 4 TVs, or a member of your staff has taken them and declared them as received. There will be telltale signs, and it is quite obvious to spot.
Skimming
Skimming is when money is taken from a customer but not entered into the system as a payment. This can happen at many stages during the transaction and could be people taking payment off a customer when not on a till and then not entering the transaction at a later point in time; it could be them not scanning items at the checkout or other actions resulting in you losing stock but not receiving the compensation for it.
You can avoid this by reinforcing correct transaction rules, having consequences in place for fraudulent behaviour, rotating cash handling staff, and having cameras over till points or familiar places where this could occur in the store.
Money Fraud
Money fraud occurs when a customer, staff member, or both, in conjunction with each other, uses counterfeit money to make a purchase, leaving you out of pocket. This is quite common for businesses that don’t have methods of checking bank notes or frequently have new employees who might not know what they’re looking for.
While not an exhaustive list, these are some of the more common scams you face as a retailer that can, in the long run, cost you money or even, in the worst-case scenario, your business too.
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