Dec 31, 2009

Gift-card fraud by employees up sharply, retailers sayBy Steven GreenhouseTheStar.com

New York–Gift cards are just so easy – so easy for dishonest employees to exploit, that is.

At the Saks flagship store in Manhattan, a 23-year-old sales clerk was caught recently ringing up $130,000 (U.S.) in false merchandise returns and siphoning the money on to a gift card.

“Gift card fraud is spiking,” said Joshua Bamfield, author of the Global Retail Theft Barometer, an annual international survey of retailers. “To employees, this is like currency. It’s almost as good as the U.S. dollar.”

In Canada, where theft costs retailers $3 billion a year, fraud by gift card is a major part of the problem, Don Berezowski, national president of loss prevention for Sears Canada, told the Star.

“Getting merchandise out of the store is very difficult, but a gift card is really sweet, right? Very small. Undetectable leaving the store. And very desirable,” Berezowski said.

The Retail Council of Canada, a national body representing retailers, now has a committee dedicated to retail organized crime, on which Berezowski sits. He said organized criminal groups are now planting 17- and 18-year-old sales clerks in retail and department stores, so these low-level employees can siphon off money using gift cards to fund other criminal activity.

Employee fraud involving gift cards appears to be growing sharply as retailers struggle to contain overall theft, now estimated at $36 billion (U.S.) a year in the industry, or 1.51 per cent of retail sales, according to an American study.

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