Just when I thought, we had discovered every type of POS fraud, we discovered a new one.

I've encountered numerous voucher fraud schemes. Here is a cunning fraud method for using discount vouchers, exploiting customers' standard behaviour of discarding receipts.

Understanding the Retail Fraud Scheme

Here's how the scam operates:

A discount voucher is an offer on a receipt for the customer to claim money on their next purchase instantly, encouraging them to buy more. It is a thriving, though expensive, loyalty program. The voucher is issued on the receipt.

• Customers make purchases, and receipts containing discount vouchers are issued.
• Many customers do NOT collect this receipt.
• Dishonest staff collect these abandoned receipts.
• They process subsequent transactions using these vouchers for customers who do not collect their receipts.
• The discount value is pocketed rather than passed to new customers.

The process looks like this.

The Financial Impact

From my experience implementing POS systems across Australia, I have seen that the potential losses for discount vouchers can be substantial. For example, percentage discounts of 10-20% could lead to monthly losses ranging from $500 to $1,000, while dollar-value discounts between $5 and $50 might result in losses between $1,000 and $2,000.

Preventing POS Fraud

To protect your business from similar incidents, consider implementing these strategies:

Staff Training and Monitoring

Educate your employees regularly about ethical practices and the consequences of fraud. Implement strict receipt handling protocols and conduct regular transaction audits to ensure compliance with company policies. Use cameras to look at the tills.

Leveraging Technology

Here is what I suggest: Transaction Monitoring Monitor duplicate receipt printing Analyze loyalty program usage

By implementing these comprehensive security measures, businesses can significantly reduce their vulnerability to POS fraud while protecting their revenue and reputation.

Real-World Example

I was consulting with a newsagent who was happy with the discount vouchers till we discovered they'd lost over $3,000 in the past few months through this scheme. The employee claimed the discount voucher from customers who still need to collect it. Their experience taught us that even small businesses aren't immune.

Conclusion

Fun fact: Employee theft accounts for 24% of retail losses.

Fraud prevention isn't just about sophisticated POS software. The problem here is the person using the POS system knows it very well. Possibly better than you. It's about understanding human behaviour and creating systems that protect businesses and customers. It's crucial to foster a culture of honesty and accountability among your team. By combining advanced POS features with strong ethical standards, you can safeguard your business against fraud.

While discounts can effectively draw in people and increase sales, retailers should tread carefully. Multiple discounts applied to a single purchase can rapidly shrink profit margins to unsustainable levels. Looking up bargain shopping sites, you can read how double discounts dramatically impact a business's bottom line in dramatic examples. Let's explore double discounts and how you can prevent them using your point of sale (POS) system.

What Are Double Discounts?

Double discounts occur when a customer receives two discounts on the same purchase. For example:

• A product is on sale for 20% off
• An additional 10% drops off thanks to the customer's loyalty status.

While this added discount is a significant saving for them, it can destroy your profitability if not carefully managed.

The Impact of Double Discounts

To illustrate the effect of double discounts, let's look at this simple example:

In this scenario, you lose $28 on a $100 item. Imagine this happening across multiple products and customers - it adds up quickly!

How to Prevent Double Discounting

Fortunately, your modern POS system offers features to help prevent double discounting. Here's how you can set it up:

1. To avoid this happening, please do the following.

   Go to system maintenance, which is marked with the red arrow.

    

   

    

   Then find this option "prevent discounting of sale items," marked with the red arrow here.

    

   

   Set this to yes, as I have here. This will stop the double discount.

Benefits of Preventing Double Discounts

By implementing this simple change, you'll:

• Protect Your Profit Margins: Ensure you're not giving away more than intended on each sale.
• Simplify Pricing: Customers and staff will better understand the final price.

My Personal Experience

I went to a bargain shopping site, where a guy explained how to get another discount on top of the existing discount for an item. I followed instructions and got a $140 item reduced to $100  for about $70. 

Additional discount management tips

While preventing double discounts is crucial, here are some other strategies to consider:

• Train Your Staff: Ensure all employees understand your discount policies.
• Clear Signage: Display your discount rules clearly to avoid customer confusion.
• Regular Audits: Periodically review your sales data to catch any discounting issues.  See how you can stop many of these automatically in our POS Software here.

Conclusion

Preventing double discounts is a simple yet effective way to protect your profits, so leverage our POS system's features and establish transparent discount policies to ensure promotions boost your business profitability.