BPM Analytics

Self-Checkout fraud: Balancing customer experience with risk mitigation

A machine that allows shoppers at outlets the ease to settle bills at a push of a button, eliminating the traditional approach of paying with cash or card to the staff at the billing counter, is one to look out for in terms of fraud mitigation. A majority of retailers, including Amazon and Decathlon, are increasingly adopting the tool popularly known as Self-checkout (SCO), to improve the ease of buying for users. In a digital universe and a world ridden by the pandemic, contactless services such as the SCO, are finding huge growth in adoption.

A recent study by experience management company Radiyant showed that 34.1% of respondents expect a “major increase” in their use of self-service kiosks, while another 57.5% of respondents expect a minor increase or continuation of their rate of self-checkout kiosk usage in the coming year. In retail markets, SCOs are being viewed as a crucial move to positively augment customer experience and are no more just a matter of convenience. Despite being apprehensive about the technical functionality and overall hygiene of SCO kiosks, the consensus observed was that SCO is a must-have industry upgrade as opposed to a mere additional feature.

It is, in fact, pressing demand for brands to opt for SCOs if we consider the reasons why consumers often abandon purchases at stores:

• 33% shoppers left the store without buying if the waiting time in queues at payment counters exceeded 7 minutes, resulting in lower sales
• About 50% of shoppers avoided stores with long queues leading to poor customer satisfaction
• And 66% of customers preferred the online mode of shopping instead of brick-and-mortar stores, directly impacting store footfall and in turn, negatively affecting the store brand image

But, beware! Beneath the automation façade of the retail market loiters an ugly truth. As with all technological progressions, SCOs also are a potential target for scams and fraudulent activities.
A survey from Voucher Codes Pro of over 2600 participants revealed that nearly 20% of shoppers have stolen at the self-checkout in the past. More than half of those people said they tricked the system because detection by store security was unlikely. In 2015, Criminologists at a University auditioned 1 million self-checkout transactions over a year, totalling $21 million in sales and found that nearly $850,000 worth of goods left the store without being scanned.
In fact, self-checkout theft is so extensive that it has a list of jargon of its own:

• Banana Trick - Switching an item of higher price with the code from a cheaper item
• The pass around - An item leaving the conveyor belt without being scanned
• The Switcheroo – Peeling the sticker from something inexpensive and placing it over the bar code of something pricey while making sure that both items are about the same weight, to avoid detection

The rising trend of SCO kiosks has made it imperative to address the problem of SCO theft. Following measures can be employed to tackle the menace:

• Boost store supervision to reduce store theft
• Invest in a well-made, low-hassle SCO kiosk with a customer-friendly user interface
• Integrate AI-based Fraud Prevention program into the cameras at checkout
• Scan QR codes using customer phones to enable contactless kiosks or deploy antimicrobial film to ensure sanitized operations

Integration of Artificial Intelligence in SCO

An AI program could compare an extensive dataset to the multiple photos of the scanned items in milliseconds. Such data analysis would help determine the product based on weight, size, colour, and brand, and assist in tracking the inventory being sold. This program eliminates the burden on the employees to monitor the SCO. Incorporating superior store security through devices, such as CCTV cameras and barcode scanners, is simple and economical. AI can also be used in the warehouse to produce greater efficiency across the retail supply chain.

Consumers are demanding it and retailers must oblige by making SCOs a part of their regular business strategy if they want footfalls at stores to grow in a world that is rapidly shifting to online shopping. While offers and discounts will work as an additional attraction for consumers to choose a particular brand, providing a digital experience offline, while also safeguarding the interests of the retailer, will be the game-changer going forward. SCO is a reasonable ask and one that will enhance the overall shopping experience, while also serving as a revenue-driving force for retail stores.