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The Numbers Behind Employee Theft

Article Highlights:

  • 88% of businesses who experience theft don't get their money back.
  • 51% of dealers have experienced theft or know someone who has.

A lot of dealers think “Employee theft won’t happen to me” or, “I trust my employees.” But the numbers around employee theft tell a different story.

There was an article in Automotive News about a dealer who lost nearly $2 million to embezzlement from his controller. How common is that?

According to the Association of Certified Fraud Examiners, 88% of businesses who experience theft or embezzlement don’t get all their money back. They never see that money again. As a matter of fact, 1 in 4 theft cases resulted in losses of $1 million or more. Furthermore, 51 percent of dealers have confirmed they experienced theft or know a dealer who has. What’s more disconcerting is the 49 percent who think there is no embezzlement at their dealership. But how can you know for sure?

When you leave your house in the morning, do you lock the door? Does that mean you don’t live in a safe neighborhood? No. It just means you’re being cautious and reducing the risk that someone will come into your house and rob you. We think of theft as a burglar in a black mask, breaking in from the outside, when more often than not a trusted employee you consider a friend, could be responsible for the biggest losses. With a quick internet search, you can find several stories of theft involving employees dealers trusted. In one, the dealer expressed how devastated he was about the situation, but what bothered him most was the mental and emotional drain knowing he trusted someone who took advantage of him.

You can’t be everywhere all the time. Hiring the “right” people isn’t enough either. There needs to be a better way to check for possible suspicious activity. You may be thinking, “That’s why I pay a CPA.” However, you might be surprised to learn CPAs don’t actively look for embezzlement. They ensure your dealership is using generally accepted accounting procedures. You could hire an auditor if you suspect something is going on but on average, dealership theft takes 18 months to find.  In total, it could be hundreds of thousands – maybe millions – before you find the theft.

To ensure your dealership is reducing your risk of theft, you need a dealership-wide monitoring solution that constantly analyzes system data for unethical business activities. This system should monitor your day-to-day operations and alert you when suspicious activity has been found.

How much will it take before you lock your dealership’s doors?


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Director, Product Planning, DMS, Reynolds and Reynolds

Scott Worthington is director of product planning at Reynolds and Reynolds. With more than 28 years of automotive industry experience, Scott leads the team responsible for product strategy for the company’s ERA® and POWER dealership management system platforms. He also manages product strategy for Reynolds eWorkflow, DMS reporting tools and analytics, and a number of other product areas.

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