Retail fraud and theft contribute to the $112.1 billion shrink problem – are retailers doing enough to protect themselves?
In our last blog, we discussed the recent rise in fraud and crime impacting the industry and the variety of methods bad actors are taking. As retailers become increasingly concerned with fraud, they are turning to a variety of options to combat the challenge. For example, some retailers are limiting the hours of their self-checkout lanes to battle shrink while others have eliminated self-checkout lanes entirely at select stores.
These attempts may reduce fraud, but they may also lead to decreased customer satisfaction; ultimately self-checkout lanes are designed to speed up the checkout experience and many shoppers prefer them to the traditional register. Instead of eliminating these valued customer touch points, retailers should turn to advanced technology that can identify and mitigate retail fraud across their online and brick-and-mortar stores.
Here are a few data-driven routes retailers can take.
Enhanced, Easy-to-Access Reporting
With GK's Central Electronic Journal and Reporting function, retailers can easily view all transactions across stores, cashiers and customers. The tool compiles an extensive set of reports for internal and external loss prevention including receipts and signatures, which can be pivotal for case investigations. It also helps managers identify employee issues, like repeat mis-scans from cashiers or excessive employee discount use which may indicate a lack of understanding of store policies or sweethearting.
By reviewing these reports regularly and investigating problematic patterns, retailers can reduce shrink and improve the speed and effectiveness of case investigations.
Advanced Returns Policies
Complex returns policies create room for fraud, whether intentionally or unintentionally. Retailers that rely on GK's Central Returns solution can ensure returns policies are consistently enforced across all channels. The solution allows retailers to create and remove limits on return policies. For example, during the holiday season, a retailer may extend the returns window from 30 to 90 days. When this change is reversed in February, cashiers and customers may accidentally take advantage of the policy, leading to return fraud.
With Central Returns, a store associate is immediately alerted to a return that goes against current store policies and shown a recommended course of action, like preventing a return or seeking a manager to help override the alert and correct the situation. The solution also considers receipted or non-receipted, item type, customer history, original tender, return tender, sale date and more to determine the legitimacy of the return and suggest an approach.
As a result, fraudulent returns are mitigated, and the store can protect its profits and inventory from misused policies and bad actors.
AI-Driven, Exception-Based Recommendations
Another approach to fraud protection is exception-based reporting. Our strategic investor, Fujitsu, offers a solution called Profit Protection that analyzes any POS transaction and store data for potential fraud by cashiers, SCO supervisors, employees or managers across all stores. The solutions also connect to CCTV video to synchronize with any transaction. With Profit Protection, retailers can easily identify suspicious patterns via AI-driven heat maps and other graphics that alert the retailer to risks.
This approach helps retailers find and resolve internal issues whether they're malicious (fraud/theft) or non-malicious (process issues). The holistic view of store processes along with visual evidence also increases the speed of prosecution or termination for bad actor employees.
Smart Self-Scanning Fraud Prevention With Camera Vision
Alternatively, if a retailer is up against an influx of fraud at the self-checkout kiosk, they can rely on our integration with camera vision solutions. This concept utilizes a camera and AI modeling to review self-scanning actions in real-time, catching issues like mis-scanned items, swapped barcodes, fake scans and more. If an issue is raised, a store associate is alerted, prompting an investigation.
We showcased this solution during this year's NRF and were energized to see guests try to outsmart the solution--to no avail. They also tested the solution's age recognition feature, which helps cut back on fraudulent transactions from under-aged shoppers.
Data-Driven Probability Assessments and Intervention
To combat fraud at the self-checkout kiosk or on self-scanning devices without camera vision, retailers can implement GK AIR Fraud Detection. This solution relies on AI and a strategic scoring algorithm to review product data and customer history in real time to determine the probability of fraud. If the probability is above the retailer's pre-set threshold, the kiosk will require a rescan from the customer. If the issue is not resolved, an attendant will be requested.
GK AIR Fraud Detection is designed to reduce shrink by correcting honest mistakes and deterring bad actors without costly hardware.
Technology Makes Fraud Detection Goals a Reality
Regardless of which technology a retailer chooses, they are working towards the same goals, including:
- Reducing fraud;
- Improving revenue and profits;
- And creating a safe and efficient shopping experience for loyal customers.
As retailers strive to achieve these goals, GK is here to help. Reach out to us today for a consultation during which we'll discuss your fraud detection challenges and identify which solution from GK or our partner organizations is right for you.
