Between scheduling staff, tracking inventory, accounting and payroll, hiring staff, training staff and the hundreds of other tasks it takes to run a restaurant, you don’t want to forget to take precautions against restaurant fraud. Fraud can cause a major loss in profits and hurt your business’ reputation. It can take place in many different ways, so we will highlight some of the most common fraudulent occurrences and provide ways for you to help prevent this from happening at your restaurant.
First it is important to note that there are two types of fraud that can occur: external and internal. External fraud is going to come from anyone that is not directly employed by your restaurant like customers or vendors. Internal fraud is fraud committed by employees, which we will cover more next week.
When looking at external fraud, a common occurrence is credit/debit card chargebacks. This is when a dispute is made about the charge on the account and a refund is given for the amount disputed. Not only do restaurants lose out on the money from that sale, but the processing fees for chargebacks are rather expensive, causing them to take an even bigger hit each time one occurs. Some of this is legitimate fraud from stolen credit cards, others are customers who have paid for their meal, and then later claim it did not meet their satisfaction. So how do you respond when this happens to your restaurant?
- Respond in a timely manner – If a chargeback occurs, it is important to respond quickly.
- Maintain detailed records.
- Provide matching signatures.
- If you have cameras, offer security footage of guest picking up order.
- Staff training – Make sure you remind your staff to keep an eye out for any suspicious activity. They can always ask for an ID to make sure the name matches the card.
How do you take measures to prevent fraud from happening?
- Streamline your processes.
- Ensure credit card statement descriptors are clear and include your business phone number.
- Have the manager’s name and number listed on receipts.
- Update information on your website and make it easy to navigate.
- Require CVV security code when they checkout online.
- Keep track of names who have claimed chargebacks before.
Although vendor fraud is not as common, it still occurs and is something you want to be aware of. Be on the lookout for billing schemes or check tampering. Roles should be clearly defined as to who is receiving the goods and who is responsible for processing payments. When roles are clear, you will have an easier time figuring out where the discrepancy happened.
Restaurant fraud happens every day, so the more organized you are, the better! Make sure all roles are clearly defined, keep detailed records, have security cameras in place and use your back office software to its fullest potential. All of this will help create a better overall guest experience and lower your chance of fraud!