How to Stop Employee Gift Card Theft

28th October 2014
A Flickr Creative Commons photo by 401kcalculator.org of Gift Cards

Gift cards are great. They are convenient, make popular gifts, are easy to purchase and can drive new customers to your locations.

But, with any new technology, comes new opportunities for abuse of the system and gift cards are no exception. Unfortunately a fraction of employees are dishonest and given the chance, will try to devise a method for theft. Additionally, there are those that are primarily honest people, but get put in tempting situations. The best way to help honest people stay honest, is to remove temptation and opportunity.

Why is Gift Card Theft Hard to Track?

Gift card theft can be difficult to track for three reasons:

1. Unloaded cards are freely available – often on the counter to drive impulse purchases. That means that common inventory methods for deterring theft cannot be utilized (more on better inventory controls here).

2. They are a currency that the customer doesn’t control. If you steal from a customer (take too much cash, return wrong change, overcharge a credit card etc), they may notice, making it a risky endeavour. If you add funds onto a gift card, the only party that may notice is management. In fact, in some cases, the “customer” may be party to the theft (more on this below).

3. Finally, Point of Sale (POS) and payment systems have not adapted as quickly as the gift card industry has evolved and restaurant managers tend to be more focused on preventing traditional means of theft. In many cases, gift card loading and payments aren’t integrated with the POS, making it even more difficult to catch, because two separate systems have to be reconciled for the issue to become apparent (more on how Livelenz helps detect employee theft here).

How Does An Employee Steal Using Gift Cards?

There is more than one way this can be done, but here is one simple scenario (of which there are many variations):

Step 1: Customer requests a combo #1 for $8.61.

Step 2: Instead of ringing in the combo, the cashier rings in and loads a gift card for $8.61.

Step 3: The patron still sees the correct price on the customer display screen and pays the correct amount.

Step 4: The cashier serves the customer their combo as per normal.

Step 5: The cashier pockets the newly loaded gift card.

In an alternate version of this, some cashiers may ring up the combo properly, but quickly clear and load a gift card once customer presents payment. This process can be done with any payment tender (as long a customer doesn’t request a receipt), and if you don’t have gift card loading integrated with your POS, the cashier’s till will balance.

How Do They Get Redeemed?

Pocketed gift cards can be sold, given to friends, or some may attempt to redeem the cards and pocket the cash. In this scenario, an employee’s friend poses as a customer and purchases a Combo 1 for $8.61. The cashier rings in the combo, processes the gift card for the same amount and then pockets $8.61 in cash. With a little more finesse, an employee could swipe the card to pay for any customer’s purchase (although the customer might be more likely to notice).

What to Watch For

If you know what to look for, there are signals that this is occurring:

    • Watch for gift card reloads/purchases that aren’t round amounts, especially those transactions that aren’t accompanied by an item sale. Most customers purchase gift cards for rounded dollar amounts.
    • Similarly, watch for redemptions on gift cards that use the whole amount of the card. A gift card loaded for $8.61 is odd. One redeemed for the full amount on the card, which happens to be $8.61 is even odder.
    • Tracking inventory is key. Counting cups, protein (hamburger patties for example) and other methods for preventing more traditional types of theft help here as well.

Looking for more information on why you should be selling gift cards and how to increase their sales? Read out post Where are you promoting Gift Cards to increase Holiday sales.


Image Source: A Flickr Creative Commons photo of Gift Cards by 401kcalculator.org

Chief Operating Officer at LIVELENZ. Greg began working part-time in restaurants when he was 15 and continued in the industry for a decade. He then began working for technology companies developing a passion for improving operational efficiencies at fast-growing organizations.

1 Comment

  1. […] Now that your gift card sales are growing – is it time to more actively monitor if they are being stolen? Learn more on how to prevent gift card theft by employees here. […]

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