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Retail fraud investigated

Keep an eye on external and internal theft and fraud, warns Mark Solon, pictured, of Bond Solon.

Training internal investigators has to be part of work against theft and fraud, external and internal by staff. A good investigation can reduce potential litigation costs; a bungled investigation, on the other hand, risks the loss of time, money and face.

Mitch Haynes, Head of Security for Oasis and Warehouse, Coast and Karen Millen, says: ‘There is certainly a risk to business if you don’t investigate properly. Shareholders and external auditors want you to take action. Police will only prosecute when you’ve done the work and it’s been well investigated, so you have to make sure your evidence is 100 per cent.’

Richard Emery, a retail theft and fraud consultant, says that training all managers to maintain and retain accurate records is just as important as investigation technique. He says: ‘For example, a store manager told the court that the stock which the defendant claimed to have refunded was not in the store. But he hadn’t printed out what the computer showed him, so he had no evidence and the jury said, “Not guilty”.’

The British Retail Consortium reports that shoplifting in the UK is at its highest level in nine years, with an average of 47 thefts per store in 2012-3; customer theft cost £177 per incident. Respondents estimated that more than a quarter of customer thefts were undetected and only one in ten was reported to the police last year. That survey reported 5,051 incidents of employee theft, amounting to 9.5 incidents per 1000 employees, with an average cost of £1192 per incident.

Mitch Haynes says: ‘Staff can be stealing in various ways, from simply taking stock to more complicated refund frauds and moving money straight into their bank accounts; occasionally they collude with outside accomplices. Investigators need a high level of training in interview technique. We don’t caution when we do an investigation interview, although some do. If you say, “You are not obliged to say anything,” and then ask about a serious breach of company procedure, we’re likely to get “No comment.”

‘But If you have strong evidence, you can say: “I have investigated this, I know that you have done X, I can show you the evidence. When was the first time you carried out this offence?” If I put my investigation notes forward, the police will caution the person and the evidence they obtain will be admissible. On the other hand, if you are dealing with a high-loss store but don’t have all the evidence, you can assess the likelihood by asking every member of staff the same key questions and looking at body language.’

At Bond Solon, investigative trainer Nick Deal points out: ‘There’s a risk that internal investigations can be either Sweeney style or too cautious. What’s the purpose of interviewing someone – to get a confession or to obtain reliable information? If you’re after a confession, that mindset infects the style of questioning, makes it oppressive and is potentially unfair. Claims along the lines of “I know you did it!” have led to miscarriages of justice. At a fact-finding interview, don’t simply say, “That’s a lie,” but work with them on a problem-solving approach: “You say this. I’ve got evidence which says that. Can you tell me why there’s a difference?” ’

Staff grievances are another area for investigation. Mitch Haynes says: ‘If a member of staff is feeling threatened or complaining about lack of promotion because of discrimination, we investigate with impartiality. The task is to get evidence, not to get a particular result. If the investigations are carried out fairly, proportionately, appropriately, consistently and correctly, then you are not falling foul of employment law. There must be no discrimination or unfair treatment in investigations – I can’t overstress that part of training – otherwise you could be facing an employment tribunal.’

If you do find yourself at such a tribunal, it is important to state your case clearly. Nick Deal says: ‘You may have to explain why you genuinely believe you have reasonable grounds for your action and a reasonable explanation. Translate it into lay terms.’

Deal says the same need for clarity applies to dealings with the police: ‘If the offence isn’t obvious, explain clearly what this person has done wrong. With online fraud, for example, you may need to demonstrate what the system is supposed to be, before describing the offence.’

Even if a solid investigation has been conducted, with acceptable questioning and correctly drafted written evidence, success often depends on the performance of the witnesses. Ensure that investigators are familiar with court procedure, understand their role and can withstand cross-examination. Witnesses may need to justify their investigative procedures, making sure they comply with relevant legislation such as the Data Protection Act, the Regulation of Investigatory Powers Act and the Human Rights Act. Also, if a case is taken to the civil courts to recover money lost, it is vital to observe the correct procedures, avoiding any accusation of business practices that might be deceitful, unfair or improper.

The investigative profession is unregulated, so there is no official requirement to undertake training and qualifications. It is however wise to keep up with the changing legislative and procedural climate, and to enhance existing investigative skills through refresher training. Nationally recognised qualifications are available, such as the Advanced Professional Certificate in Investigative Practice (APCIP), and are welcomed by employers as they demonstrate competency and a commitment to continual professional development.

Best practice in note-taking: don’t give it the ELBOW
No Erasures – don’t cross out large portions of text so that they are illegible.
No Leaves torn out.
No Blank spaces – or, if there are, rule them out.
No Overwriting.
No Writing in the margins (except dates, times and/or initials).

About the writer

Mark Solon is Managing Director of Bond Solon.


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