The High Cost of Internal Theft

Last year, 1,082 associates stole $832,000 worth of merchandise from Exchange stores.

Now, the associates, if convicted, face time in federal prison because the Exchange is part of the U.S. government. Loss Prevention Directorate leaders vow that the remaining losses are actively being pursued by investigators.

Sticky-fingered associates face getting fired, risk future employment with other government agencies and are liable for repaying the Exchange for the losses. Also, theft from the Exchange also affects the organization’s dividends to Quality-of-Life programs for Soldiers, Airmen and their families.

In a recent case in the Pacific Region, an associate with 18 years of service at the Exchange was caught under-recording sales to steal cash overages from her register. She confessed to Loss Prevention investigators to stealing $59,000 in three years. The associate, who was fired, signed a promissory note to reimburse the Exchange. Since then, this case was turned over to Air Force Office of Special Investigations for prosecution.

The National Retail Federation reports that nearly 49 percent of retailers reported an increase in inventory shrink.

Another recent case involves an Exchange manager committing time fraud. From January 2016 to June 2017, the manager admitted to falsifying her time sheets to receive pay for hours she did not work. Her actions cost the Exchange just over $10,000. The manager voluntarily resigned.

But the Exchange isn’t the only retailer facing employee theft. The National Retail Federation reports that nearly 49 percent of retailers reported an increase in inventory shrink—and employee theft accounted for more than 36 percent of it.

“As a custodial of the Exchange and as managers, if we build an environment of trust, this will reduce an employee’s temptation to steal,” said Eric Stewart, vice president of the Loss Prevention Directorate. “Most employees who steal are not professional thieves or dishonest; there was an opportunity that presented itself,” Stewart said. “A few reasons why employees steal is compulsion, disgruntlement and a feeling of entitlement. But regardless of the reason, the Exchange policy has always been to seek prosecution for every case.”