Strategies for keeping fraudulent accidents from hitting the bottom line

Apr. 20 2009
By Andrew Wren and Keith Aubele
Email: andrew.wren@wrensolutions.com, keith.aubele@wrensolutions.com

Retailers endure losses from many sources: shoplifting, employee theft, and administrative shrink. These losses are the subject of much scrutiny and energy in retail environments. However, of increasing financial significance to retailers is the cost of fraudulent accidents. Customers and employees alike experience accidents on the premises -- some legitimate and some fraudulent. But surprisingly, retailers spend little time or energy attempting to discern which accidents are fraudulent. False workers' compensation claims or self-inflicted customer injuries can cost retailers millions in losses each year.

Particularly during tough economic times, retailers should focus on tools and techniques to pinpoint fraudulent accidents and take steps early to avoid having the business bear the cost of damages for which they are not responsible. A few simple best practices can go a long way to preventing fraudulent claims.

Maintain areas
Poorly maintained, messy areas are much more likely to be the site of both legitimate and fraudulent accidents. Retailers should ensure that aisles are free of clutter or debris. Likewise, merchandise should be neatly and securely stacked on shelves, so as to avoid items falling out onto the floor. Maintaining fully stocked shelves is also an important preventative measure, as items are readily available and easy-to-reach. Customers are more likely to hurt themselves if they are climbing on shelves to reach far back on a shelf to reach merchandise that is not plentifully stocked. Con artists will see much less of an opportunity to set up fraudulent accidents in pristinely maintained areas. Cluttered, half-kept areas present a much easier target.

Deter crime
Deterring people from setting up fraudulent accidents is the best way to avoid the problem altogether. Plentiful use of video and prominent surveillance signage let people know they are being watched. This makes it much more difficult for would-be con artists to have an opportunity to set up a fraud unnoticed -- for example, intentionally spilling liquid in an aisle or pulling goods off of a high shelf to appear as though something fell. Closely monitored areas, either by video or with associates assigned to serve customers in the store, are less likely to be the scene of a fraudulent accident.

Pinpoint high-risk areas
Criminals are likely to identify and target the weakest point. Retailers should spend some time identifying those high-risk areas, depending on the unique configuration of their store. For example, some retailers offer back-door pick-up for customers to drive their cars around and get assistance loading large items into their cars. If the loading process is unmonitored or casually managed, this can become a highly likely scene for fraudulent accidents. Employees or customers with ill intentions can claim injury due to lifting heavy items, or damages to their cars while items were being loaded. In a grocery store, the produce area may present a particularly high risk, given the frequency of wet produce being transported to shelves or being inadvertently dropped by customers. For stores with direct-store delivery, vendors entering the store to place their merchandise may have the run of the store with little monitoring, framing an accident. Each store should evaluate and put policies in place to address the areas of greatest risk.

Investigate
In case an event does occur, every accident claim must be investigated to the fullest so that the cause of the accident may be determined. Video surveillance and incident capture are the best tools to truly identify the cause of an incident. Video provides the evidence to support the rest of the investigative elements. Interviews may also be important to determine if and what other customers or associates saw. Performing a background check of the alleged victim can also provide valuable context in terms of history of employment and lawsuits. It is important to treat the investigative case as if it represents a loss of hundreds of thousands of dollars, because over time fraudulent accident claims can exceed this amount several times over.

Educate and encourage
A solid accident-prevention program is worth its weight in gold, as long as it is properly communicated, documented, and executed. Facility safety and LP teams should undertake the role of educating store associates. Certification of select store associates as safety officers is another way to enhance the education process. It is a good idea to put incentives in place to reward employees for maintaining policies designed to eliminate fraudulent claims and for reporting known fraudulent activities of associates anonymously.

Retailers have enough losses and risks to handle without bearing the additional costs and resources required to investigate, track and resolve fraudulent accidents. By maintaining a clean, well-monitored retail store environment and putting in place a few best practices, loss prevention can get back to the business of preventing loss.

Andrew Wren is president of Wren (wrensolutions.com), a provider of comprehensive video-surveillance solutions for more than 25 years. Wren actively participates in the retail security industry and serves on the Security Industry Association’s Advisory Council. He can be reached at andrew.wren@wrensolutions.com.

Keith Aubele is director of retail business development for Wren, where he drives the company's strategic retail initiatives including market analysis, product development, and customer advisory services. He can be reached at keith.aubele@wrensolutions.com.