Telling NACUFS college c-store operators they were “pioneers” in the future of convenience retailing Tim Lindblom warned attendees of the 2013 NACUFS Neighborhood Retail Market Workshop to pay more attention to loss prevention if they wanted to achieve optimum performance in their stores.

“Many operations do not track the shrink they experience, even as it remains a major drag on financial performance,” he said. “Very often no concerted effort is made to address security issues until the problem becomes so serious that a response can no long longer be avoided.

“That isn’t loss prevention,” he added. “That’s loss reaction.”

Lindblom cited research that suggests the biggest risk for c-store security losses comes from employees, adding that experience shows the majority of employees will take liberties “when in need or when given a risk-free environment.”

Ensuring that the c-store environment does not offer such “risk-free” opportunities is a key strategy in minimizing shrink, he said. In the course of his presentation, Lindblom provided dozens of examples of common c-store “scams” that enable dishonest employees to game the POS system or facilitate theft by friends or accomplices.

It’s important to understand how such schemes are employed and to structure financial procedures, loss prevention strategies and technology safeguards to prevent them, he said. That means implementing systems to review POS “exceptions” of various kinds and making sure employees know that sales records are being regularly audited.

Large retail chains usually employ technology to constantly evaluate transaction patterns and in some cases even movement of hands and items at register stations, he added.

Lindblom, a principal with Gulf Coast Loss Prevention (a company which offers a variety of technology solutions to audit retail transactions and exceptions) described a number of other types of “Sweetheart” and credit/debit card fraud techniques. He also offered advice on how better-structured store procedures and technology solutions can minimize these and other loss types.

“Think loss prevention, not loss reaction,” he re-emphasized. “It is critical that your employees are aware of your concerns, established protocol and the consequences if violations are discovered.”

The Neighborhood Retail Market Workshop was offered as a preconference educational event at the annual NACUFS national conference. It also featured nearly a dozen other speakers and workshops, the NACUFS “Best in the Business” C-store awards luncheon and a poster table session to introduce attendees to new convenience retailing products offered by the workshop’s sponsors.

10 Common C-store Scams

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In many cases, procedures that have been established to address specific customer needs also provide opportunities for theft, Lindblom said.  Among the most common:

1. “No Sales,” an option on most registers that allows the cashier to make change for a customer as a service, without ringing an actual purchase. “It also provides an opportunity to open the register drawer while collecting a customer’s money, without logging a sale and later pocketing the cash.”

2. “Item Corrects,” designed to allow employees to correct a mis-ring, but which can also let them delete an item from a sales record after the customer has left, or when cash is presented, reducing the logged sales total.

3. “Returns or Refunds,” allowed to let a cashier provide a credit when a customer returns a product, but also providing an opportunity to log a credit when no customer is present.

4. “Coupons,” distributed to offer customer promotional discounts, but which may also give an employee a way to “add” a coupon to a transaction without the customer’s knowledge. Lindblom cited a major c-store client that wondered why couponing was sometimes so much more effective in one store than in other stores. “He thought figuring out why one store attracted more coupon customers would help him grow the business. What he didn’t realize is those stores weren’t logging more real sales, they were logging more phantom ‘Buy One Get One’ sales."

5. “Price Look Up,” which displays the price of a product to the customer who wants a price check, but which also allows a clerk to display a price that a customer thinks is rung, only to pocket the money later.

6. “Suspended Transactions,” designed to allow a clerk to put one customer on hold temporarily while serving the next customer, but which also provides an opportunity to amend a sale with item corrects after the customer departs.

7. “Transaction Voids,” which allows the voiding of transactions when a customer finds he doesn’t have the ability to pay, but which can also be used to void a cash transaction so the money can be pocketed later.

8. “Employee Discount Key” set up to let an employee receive a legitimate discount on food purchased during a shift, but which also allows the cashier to add a discount to a fully paid purchase after the original total is displayed.

9. “Combo Rings,” an option designed to promote meal combinations, but which can be used by a dishonest employee to sell individual items at full price, subsequently ringing them together to trigger a discount.

10. “Sweethearting,” the practice of significantly under-ringing items for accomplice customers, sometimes used to provide “friendly” discounts, and other times used to check out merchandise at nominal prices so it can be resold later.