Skimming Fraud

Skimming, if you don’t already know, is the removal of cash from a company at some stage before the transaction is recorded into their accounting system.

As the transaction is never recorded, it is an extremely difficult fraud to detect.

Those most likely to commit skimming fraud are employees who have direct contact with customers, and especially those who handle cash transactions.

Below are the three means of skimming, along with tips on how you may be able to detect them –

Short-Term Skimming

Short-term skimming is, in some ways, borrowing money rather than stealing it.

By delaying the receipt of payment, the employee is able to use the funds for short term investments generating interest or other funds to their benefit.

Ultimately, the money may be returned to the company, albeit at a later date.

However, the company may lose out on interest payment in the meantime and theft is still theft, however you look at it.

Short-term skimming may be identified by analysing customer habits – do some seem to suddenly be paying late?

Or, are cash tills showing losses on some day and gains on others?

Unrecorded Sales

The most common form of skimming involves simply not recording sales.

Even though there may be controls in place, such as audit rolls, managers, and CCTV, dishonest employees may still be able to pocket cash from unrecorded sales whilst evading detection.

Such skimming can be extremely hard to detect.

One method is to pre-number audit rolls in some way.

This will highlight cases where the employee is manipulating their till such as to not record sales.

Otherwise, a more visible management or security presence in the area may be the only other option.

False discounts

Many employers offer their staff discounts as part of their benefits package.

In order to obtain this discount they may need to swipe or present a card at the time of purchase.

Some dishonest employees may take advantage of this by discounting customer’s bills without their knowledge and then pocketing the difference between the full and discounted values.

The best means of detecting this type of fraud is through surveillance if available, or strong controls of the staff discount procedure, i.e., audits which would reveal high or strange usage patterns.

Fraud Prevention

Irrespective of how an employee may attempt to commit fraud by skimming, the simplest means of prevention and detection is via the use of strong and clearly communicated internal control methods.

Clearly defined roles and a loss prevention strategy can remove temptation and aid in rapid detection, thereby minimising risk to this type of fraud.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

Comments

  1. On the small scale of this, convenience store clerks are probably the most notorious. My dad alway went on and on about this when I was growing up. It got a little annoying to hear him constantly tell me, “if you’re not careful, they will steal from you”.

    So, fully ten (or more) years later, I am working really late (or early depending on how you look at it). It was about 3 or 4 am (pst) and I decided that I needed one of these ‘red bulls’ or some other energy drink. I don’t remember if I was just waking up, or had been up all night, but either way, I was a zombie (not haloween style either).

    I perused the cold bev. section, selected the standard sized red bull energy drink fully expecting to pay the $2.00 USD price those things fetch.

    I shuffled over to the counter, slid the can towards the cashier, and pulled out the ‘wad o’ cash’ that would be used for payment.

    I believe I peeled off a 5 or maybe a 10, probably wouldn’t have cared if the stupid thing cost ten bucks, I just needed my energy fix.

    For some reason (and I never do this anymore, shameful as it is) I looked at the LED display to see how much he was charging me. Probably some fluke in the time/space continuum but it happened, I looked at it.

    $4.85

    Dude was gonna charge me five bucks for a red bull. For the small one. Not the new big one. The small one.

    Like I said, I probably didn’t really care, but it just struck me as odd. So odd, that I mused out loud, “five bucks for a red bull?” And I ended the sentence like that. With a question. Raised the eyebrows, you know, the whole bit.

    I was shocked when he got ‘all embarrassed’ and said something to the effect of, “oops, I forgot to clear the last persons item off the register before I rang up yours”… nervous chuckle.

    I just kind of grunted, gave him his $2 and shuffled out to the car. I was a limo driver at the time, so I settled into my town car, and recapped the event in my mind. I may have been tired, but there was no doubt that the way this guy acted when I “called him out” was nothing but guilty.

    I know that a common skimming practice (esp. @ convenience stores) is to leave the drawer open during cash transactions and not give exact change. A dollar here and a dollar there over the course of the day can lead to a decent ‘bonus’ over a days work. Esp. if you give change for a ten after receiving a twenty. I was just shocked that it had almost happened to me, and even more shocked that I caught it.

    anyway, good post

    jb

    by the way, I was looking at your ‘about me’ update.

    you are 23 and have 3 kids?

    wow

    • hehe.. I’m 10 years older than you really!

      Where I live there are a few certain stores that are notorious for trying to give incorrect change, even after mentioning it to them countless times.

      They also ring up the wrong amounts – deliberately lower – in order to ‘cook the books’ and pay less taxes.

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