Employee theft is a significant issue for American businesses because it’s challenging to detect
If you run a business in the United States, there’s a good chance you’ve been the victim of internal theft. According to the National Federation of Independent Business, 64% of companies in the country have fallen victim to employee theft at some point, with heists averaging $20,000 in losses.
Many of these thefts continue for significant periods, too. The average employee-theft scheme lasts 16 weeks, and some even recur for up to 20 years. So, a worker could be stealing from you regularly, and it could take years for you to find out.
These thieves choose to steal money the vast majority of the time, with 40% of incidents involving cash. Roughly 18% of stolen items are products the company sells, 16% involve office supplies, fuel, or time-card manipulation, and 12% are materials. Tools and equipment are also common targets of internal thieves.
Employee theft is common and can lead to businesses closing their doors for good, making it essential that organizations do everything in their power to stop workers from stealing. Here’s a look at more employee-theft statistics and information on how retail security cameras can catch shady behavior.
How much employee theft costs businesses
The cost of internal theft is nearly inconceivable because the numbers are so large. The National Federation of Independent Business believes American companies suffer $200 billion in annual employee-theft losses.
In addition, the Association of Certified Fraud Examiners reports that organizations worldwide lose 5% of their revenue to internal fraud, which, in theory, could take the cost of global fraud near the $4 trillion mark.
Small and medium-sized businesses are common targets, too, as companies with 150 employees or fewer experience 80% of thefts. In addition, nearly half of employee thefts are at organizations with fewer than 25 staff members.
A recent example of internal theft at a small business involves Velodrome Finance, a central trading and liquidity marketplace. In August 2022, the organization announced that $350,000 had gone missing from an internal wallet. Investigators soon discovered that an employee had removed money from the wallet, turned it into crypto, and transferred it to a decentralized non-custodial wallet before pocketing it.
Velodrome was very fortunate because they could recover the missing money — but this doesn’t happen in most scenarios.
Few thieves are caught
The estimated expenses of internal theft are significant, but we don’t know how much employee theft really costs because only 16% of companies report these crimes to the police. Business owners don’t seek legal action for various reasons. But typically, they don’t think pursuing charges is worth the time, effort, and money.
Some companies don’t wish to charge their employees because they feel a sense of family with them, despite their dishonesty, while others don’t trust the justice system to do its job.
The result is a problem that’s likely far worse than most employers believe and a situation where workers may feel like they can get away with theft because of little accountability.
Ways to prevent employee theft
There are multiple ways business owners can mitigate, prevent, and identify theft to help keep their companies running.
First, employers should complete background checks and speak with references before hiring anyone. Taking this quick step could keep problem workers away from your business in the first place, minimizing potential theft.
Drafting an employee code of conduct and creating a transparent culture with viable access controls is also advisable. Your employees should know what you expect of them at all times, and workers will often police themselves when a strong culture is present. In fact, the Association of Certified Fraud Examiners reports that over 40% of uncovered internal theft cases result from another employee providing tips. Less than 5% of businesses offer whistleblowers rewards, which could be another way to harvest tips on fraud and theft.
Keeping a close eye on inventory and your financial statements should go without saying. About 56% of small businesses conduct external audits of their financial statements, which can uncover missing funds. Only one in six small businesses conduct surprise audits, though, which could be more effective than completing audits on a set schedule. No single employee should have access to all your financial statements and funds without oversight, which is why an external third party should conduct audits from time to time.
Finally, keeping physical tabs on your business and recording employee behavior adds another layer of security. Retail surveillance can protect against employee theft, especially because investigators can review footage when inventory, equipment, or cash goes missing.
A Walmart employee in Twin Falls, Idaho, is currently facing charges of grand theft after taking nearly $4,000 worth of items home after her shifts without paying for them. These thefts occurred over the course of a month, as she was slowly able to get away with electronics, hardware, pet food, and cosmetics.
Of course, Walmart has numerous retail security cameras, making it easier to review the employee’s actions and see what she was taking from the business.
Investing in retail surveillance
Retail surveillance cameras help you monitor productivity and activities, reducing instances of theft and fraud at your business. Installing some cameras in strategic locations also creates a record of employee behavior, giving you legal proof when terminating a worker or pushing for charges after uncovering theft.
Mobile Video Guard can assist with all your retail surveillance needs. We can provide the ideal camera setup for your business, providing evidence of crimes when you notice something missing while deterring theft and fraud proactively. Contact Mobile Video Guard today to get a quote.