Can You Use Your POS To Help Eliminate Restaurant Fraud?

Restaurant Fraud
Article by Jesse Noyes, Senior Director of Marketing, Upserve

Fraud comes up a lot in the restaurant industry. It’s with good reason. In a business where margins are always tight, customers literally walk in and out, fraud continues to be a constant concern.

Thanks to improvements with credit cards, such as the EMV shift, it’s a little harder to rip off a restaurant. But fraud is still a problem. And when you’re balancing servers, bartenders, kitchen staff and customers – all with varying access to your restaurant’s system – managers need to maintain full visibility into every transaction.

But did you know your POS has other features to help in your efforts to keep transactions safe and your business secure? Scammers are a crafty lot. It would be nice to see them apply their cleverness to something worthwhile rather than hurting small businesses. But as long as there are people motivated to harm hard-working businesses we all need to be ready for the following:

Auto-grat scams

Automatic tip calculation is a genuine convenience for large parties and those who have difficulty determining appropriate gratuities. But in the hands of an unscrupulous server, who adds the tip to the bill total without informing the customer, the resulting additional tip is pure gravy.

It’s also pure theft, and a guaranteed way to lose repeat business, once the customer figures out what happened. In the era of real-time feedback on social media, the last thing your business needs is this kind of publicity.

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Your POS has the ability to determine which tables qualify for an automatic gratuity, so management can easily see which large parties in your dining room will be targeted. If you see cash left after a table has already paid a bill, you may want to intervene and remind the guest that gratuity was already covered, and additional cash should only be left if they intended to do so.

Coupon scams

Discounts are a fantastic marketing tool. But they’re only good if the customer is aware of the deal. Shady serving staff can simply take coupons and apply them after a customer pays with cash, pocket the money, and no one is any wiser.

Thankfully, your POS system can ensure all active coupons loaded into the system, and that they’re applied directly to an order, rather than after a cash transaction is complete. This may not change your server’s stripes, but it will certainly help protect your valued customers, and your reputation.

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Voided transactions

Most common at bars and clubs, which deal in hundreds of varied transactions throughout an average night, unscrupulous bartenders can very easily ring up tremendous bills, then claim ignorance and void out the most expensive items for cash refunds.

Except there are no guests behind those transactions – just wads of unaccounted cash. In a slow restaurant bar, this would never fly. But in a thumping nightclub with high ticket table service bills throughout the facility, a “mere” $500 discrepancy is a drop in the bucket for management, and an easy target for scammers looking to pad their own pockets. Even worse? Serving up complimentary drinks for cash transactions and pocketing the money but adding a tip to the jar as a cover-up.

The “Wagon Wheel”

This is one that deals directly with a restaurant’s POS system, and can be easily avoided if monitored correctly. In this scenario, a waiter transfers an item like a soda from one check to another prior to closing the tab when a guest pays in cash. Then, the next time a guest orders that soda, the server starts the ticket on that tab and continue to transfer the soda while they pockets the cash. Sometimes known as the “revolving soda,” this frequently happens with items like beverages where the server or bartender is preparing their own.

To avoid this, restaurant owner’s can monitor activity and behaviors such as low sales of server-controlled items like drinks, compare bartender performance over the same shift, or set restrictions requiring a manager to authorize any transfers. While a few dollars a soda doesn’t sound like much, over the course of the night, a server can pocket a substantial bit of cash that should be going to the restaurant.

The list goes on. But, thanks to loss prevention features built into modern POS systems, hospitality managers now have the ability to get ahead of scams being run. By leveraging algorithms to identify patterns and suspicious transactions, such as increases in coupon redemption or notably low cash totals, and help you bore down to the source of the problems, before they get out of hand.