POS Fraud: Four important pieces of data to monitor

Restaurants operate with a Point of Sale (POS) system.  In general terms, it’s the back office recordkeeper for the restaurant. Many restaurant owners and managers use it for standard sales reports, customer reports, dashboards, and loads of information by transaction, by hour, by person, by day. I often wonder how many restaurant owners and managers are using “the rest of the data” to identify fraud or the potential for fraud in their quick service restaurant. If someone is motivated to commit fraud, technology can be underestimated in its ability to reveal the truth.

Devoting four minutes a day to the following four data points in your POS may reveal fraud happening in your quick service restaurant:

  1. Consistent or multiple “no-sale” transactions: hitting this button allows the cashier to access the drawer without making a sale, and easily remove cash.
  2. Voided transactions: these can occur throughout the day (trends can be viewed by shift, by employee) but can also especially occur at the end of the day (after close).  Whomever is doing the end of the day reconciliation can void transactions and take cash equal to the amount of the sales.
  3. Excessive discounts: employees can input a discount for a customer but the customer pays full price, and the employee pockets the difference. This can also be accomplished through excessive coupons. You want to be able to identify the use of discounts to a particular product or employee.
  4. Labor exceptions: look for changes to time-clock information, WHO is changing it, and by how much.

This data is readily available for you, whether it’s via dashboard, web-based, or an email alert, and someone should be monitoring these types of transactions daily so that action can be taken if/when something appears amiss. In addition, it’s important to review the trends of these transactions over time. Upon doing so, you will begin to see patterns occurring by shift, by register, by employee, or even product.

Often the system can allow you to set parameters of what IS acceptable and what IS unacceptable for each variance being monitored. When the results are filtered and determined unacceptable, the system will identify those that fall outside of the acceptable limits with no effort from you.

If you have implemented integrated video surveillance, then these reports become even more valuable. The POS will highlight transactions that you have identified as exception transactions (voids, no- sales, etc.) and it can pinpoint the surveillance footage to determine if a crime has truly taken place.

Clearly, reviewing the POS data in tandem with the surveillance video is the ideal, because if employees know they are being monitored that closely, they may think twice before attempting any of these transactions.