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CHAPTER SEVEN. Skimming and Cash Larceny

WHEN WE HEAR ABOUT skimming fraud in the news these days, it is usually related to the theft of credit or debit card information using an electronic - - device that skims or reads and stores customer credit card information from the magnetic stripe on the cards. With the advent of chip technology, where the customer has to enter a personal identification number (PIN) to complete a transaction, skimming magnetic stripes has moved on to skimming radio-frequency identification (RFID) tags information embedded in new credit cards. RFID transactions are for small currency transactions that need no signature or PIN.

When we speak about skimming, we are talking in the more traditional sense of removing cash prior to the cash being entered into the business system. This differs from cash larceny where the cash is stolen after it is recorded in the business system. Because of the recording processes, larceny is much simpler to detect than skimming as it leaves audit trails.

SKIMMING

Any employee who handles cash is in a position to skim. This includes bank tellers, sales staff, wait staff, parking attendants, apartment managers, and others whose duties include the collection of cash from customers.

It is not only employees that may skim, but owners of the business have incentives to skim also. It may be to reduce obligations such as retaining sales taxes collected or to reduce income taxes or royalties payable. It may also be to create a slush fund to make unrecorded payments such as bribes.

Skimming can occur when cash is removed from the mail or from the cash register till. The simplest form is by just not entering the sale at all. Have you ever noticed that when you purchase a single item at grocery stores or fast-food stalls and the cash register was still opened from the last transactions, the cashier might not ring up your sale, take your cash, and give you change? You should carefully check your change, as you might also be short-changed, either on purpose or by accident, when the cashier has to do the math manually. Sales could also be recorded for a lesser amount than actually charged and the difference pocketed. Recording discounts or larger than normal discounts that are not offered to the customer also puts cash into the employee's pocket while still balancing with the cash register.

Excessive refunds, price adjustments, discounts, voids, and no-sale transactions should be reviewed carefully on an employee-by-employee basis as these transactions may be related to skimming.

A sophisticated, but less successful, form of not having the sale show up on the cash register tape includes removing the print ribbon temporarily; another scheme is to remove the after-hours sales recorded on register tapes and insert a fresh, blank roll for regular hours. While this may have worked in the past, modern cash registers or electronic cash registers have built in Z and X totals that cannot be accessed or reset without a physical key or access codes. Even if sales are not printed on the cash register tape, the amounts are still cumulated in the Z and X totals, as discussed in Chapter 16 on zapper fraud. These totals would not then reconcile to the amounts shown (or not shown) on the tape.

 
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