POS Theft: The Hidden Threat Inside Your Point of Sale—and How to Stop It

When people think about retail loss, they often picture shoplifters walking out the door. But an equally dangerous risk is seated right behind your counter: POS theft —also called point of sale theft —committed by employees manipulating the register. From fake refunds and voids to discount abuse and no-sale cash grabs, POS theft quietly erodes margins until it becomes a crisis. This isn't a fringe problem. The National Retail Federation (NRF) reported average U.S. retail shrink of 1.6% of sales in FY2022—$112.1 billion in losses . Internal (employee) theft accounts for an estimated 29% of shrink across surveyed retailers. National Retail Federation While those numbers span all loss types, the point of sale is ground zero for many internal schemes because that's where employees can most easily manipulate transactions. And when internal theft is investigated, it's not petty: one analysis citing NRF and Jack L. Hayes data put the average internal theft loss at $2,180 per investigated incident (with another study showing $1,136.93 ), a reminder that even "small" cash or refund abuses add up fast. ASIS International Beyond retail-specific shrink, broader occupational fraud research shows why letting POS theft linger is so costly. The ACFE's 2024 Report to the Nations (based on 1,921 real fraud cases) found a median loss of $145,000 per case and a typical scheme duration of ~12 months before detection. The longer schemes run, the higher the bill. Tips were the single most common detection method. ACFE +2Anchin, Block & Anchin LLP And the "true" cost is higher than the register total. For card-present and digital transactions, research finds each $1 of fraud ultimately costs about $3 once you include chargebacks, fees, labor, and customer remediation. That multiplier applies to many fraud types and helps explain why POS theft can ripple through your P&L. LexisNexis Risk Solutions What POS Theft Looks Like in the Real World Refund/Return Abuse. An employee issues a refund to a personal card or cash drawer without merchandise present, or processes "wardrobe" returns for accomplices. Variants include fictitious returns and receipt reuse . March Networks Void Manipulation. A legitimate sale is voided after the customer leaves; inventory walks, cash doesn't settle, and the difference is pocketed. Some employees void individual items so the drawer "balances." Solink Discount/Price-Override Abuse. Staff apply unauthorized discounts or manager overrides for friends and for themselves. Because the drawer still balances, these can hide in plain sight. No-Sale and Cash Skimming. Frequent "no-sale" opens let employees remove cash. Without video or exception reporting, detection is hard until end-of-day variances become chronic. Sweethearting. Employees intentionally don't scan items for friends/family. It looks like speed or a scanning error unless you pair POS data with video. Collusion & Mixed-Channel Fraud. Today's POS often connects to online ordering, wallets, or QR payments. That widens the attack surface to include promo code abuse, duplicate refunds to card and wallet, or curbside pickup shenanigans—each of which can start at the register but finish in digital channels. And remember: digital channels now contribute over half of fraud losses for many ecommerce and retail businesses. LexisNexis Risk Solutions Why POS Theft Persists Weak Controls and Too Much Trust. Retail moves fast. When manager approvals are lax or credentials are shared, bad habits become normalized. Poor Visibility. Without exception-based reporting (EBR), you're blind to patterns—e.g., who has the highest refund rate on low-value items, or who runs voids just after closing. Ineffective Segregation of Duties. The same person who rings sales also counts the drawer, reconciles refunds, and closes the batch—so there's no independent check. Fragmented Payments. More payment types = more refund rails. Without centralized audit trails across card, wallet, and third-party apps, reconciliation gaps become hiding spots. (Remember the 3:1 "true cost" —each unspotted $100 refund can cost $300 all-in.) LexisNexis Risk Solutions Delayed Detection. The ACFE shows the median fraud runs ~12 months before discovery ; many schemes leak value for a year before anyone notices. Anchin, Block & Anchin LLP The Business Impact You Actually Feel Margin Compression. A 1.6% shrink rate will erase the profit on low-margin categories. National Retail Federation Operational Drag. Managers spend hours on after-the-fact investigations instead of coaching and selling. Chargebacks & Fees. Fraudulent refunds can cascade into disputes, card network fees, and acquirer scrutiny—amplified by that $3 true cost per $1 lost . LexisNexis Risk Solutions Cultural Erosion. When staff see "little" abuses go unpunished, wrongdoing spreads. Conversely, consistent controls and quick detection deter opportunists. What the Data Says Works The ACFE's analysis consistently shows tha