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Home > Cases > Internal Theft Case Study: Just Trim a Little Off the Top

Internal Theft Case Study: Just Trim a Little Off the Top

Internal Theft Case Study - Just Trim a Little Off the Top: Case Studies, Summit Loss Prevention Consulting, Inc., Indianapolis, Indiana (IN)

The Summit Investigative team has successfully conducted thousands of internal theft investigations of all types and sizes, from cashier fraud within a small family owned hair salon chain to the pre-release theft and sale of a holiday season DVD release from a major Hollywood motion picture studio.

The case study below is an example of how even a minor internal investigation can reap unexpected rewards for the  independent business owner or operator.

Internal Theft Case Study: Just Trim a Little Off the Top

A Central Indiana couple owned six units of a nationally franchised hair salon chain. Each store had an individual manager & assistant manager, however the managers also performed as stylists and could not watch everything occurring in the shops at all times.

When the owners checked their recent sales figured, they noticed that the “product sales mix” of one of their units varied greatly from the other five. In most of the salons, full haircuts at $12 apiece accounted for approx 80% of hair cutting sales, while trims, which only cost $6 each, made up the additional 20% of sales.

At the store in question, trims were outselling haircuts by a 60 - 40 ratio, which raised a red flag. The owners tried to track down which employees were working on the days this occurred but found that sales were being rung under the ID numbers of employees that were not working at the time of sale. After a brief initial investigation, they realized that this was a more complicated situation than it appeared, and that they were not equipped to handle it on their own.

They contacted us to perform an investigation of the unit in question, as well as perform a company-wide loss prevention assessment of the various store locations.

Acting as the company’s Loss Prevention Department, we immediately instituted a few simple procedural changes to curtail the problem:

  1. The first step we took was to clearly inform all the company's employees that a Loss Prevention Department existed, an investigation was underway, and that changes were going to be made.
  2. Required all current employees to sign a “Duty to Inform” Policy agreement and added the form to all future new hire packets.

Cut Your Losses With An Effective Internal Investigation

As part of our investigation, we performed background checks on all existing employees as was allowed by a clause in the company’s employment application. During the course of these checks, one employee was found to have falsified his application and was immediately terminated for cause.

Additionally, we discovered that while the company’s register system had the ability to force employees to sign in and out for each sale, it was not being used properly. We changed all employee ID numbers and trained the staff on how to use them correctly. 

Some of the other steps taken to improve the company's loss prevention program included:

  • Initiated a Companywide Spot Check Program:
    • Randomly visited each store on a weekly basis to ensure compliance of the new procedures.
    • Performed this function for six months after investigation was completed.
  • Changed or added procedures and/or duties for store management to perform, including:
    1. Daily Checkout – Note and record sales percentages to detect any abnormalities
    2. Daily Spot Checks of Sales Procedures – verify correct use of ID #s
    3. Double check applications for accuracy on a regular basis
    4. Perform background checks for all new hires
  • Introduced Tony Jarana as the company's new Loss Prevention Manager and provided information to the employees on how they could utilize his resources, if needed

Internal Investigations: Small Investigations Can Lead to Big Results

While this small investigation resulted in reversing the initial cut vs. trim problem, conducting the investigation has paid for itself through its affect throughout the company. Tightening  and improving company-wide LP controls resulted in improved sales performance in the other five stores, to one degree or another.

In some instances, internal investigations may actually be profitable for the client. Restitution from individuals responsible for causing loss can be as much as three times the initial loss. In addition, the cost of investigative services can be retrieved.

When you decide to conduct an investigation, you are doing more than just solving the one case. The more you investigate, the more that seems to be discovered, uncovering problems and issues you were not even aware of, like finding the employee that lied on the employment application.

How to Prevent Situations Like This

Most importantly, you want to ensure that all of your employees are aware that the company will vigorously respond to any loss issue it sustains in a very methodical, concrete manner. The initial investigation acts as a deterrent and helps create a safer, more worker-friendly environment and develops a "Culture of Honesty & Integrity.”

For more information our our abilities to conduct both small and large internal investigations, call 317-363-8312, send email to or submit the short form below:




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