When we think about crime in the retail space, it’s more often than not shoplifting or ‘shrinkage’ that comes to mind.

However, while recorded shoplifting offences reached a peak earlier this year, it’s another age-old risk, fraud, that retailers will need to shift their focus to following the recent introduction of the Economic Crime and Corporate Transparency Act (ECCTA). 

The assent of the ECCTA bill last October has significantly shifted the risk burden associated with fraud and, unlike cases of shoplifting, the courts are less likely to see retailers as the victim. I talked in depth about the implications of ECCTA in a recent series of articles, which you can revisit via the FRP website.

Most interesting is the new offence of ‘failure to prevent fraud’. Under this, an organisation will be liable where fraud is committed for the benefit of an organisation (directly or indirectly) by an associated person acting for or on behalf of the business. The penalties can only be mitigated if the organisation has ‘reasonable’ fraud prevention procedures in place. Crucially, the leadership of the company does not need to have orchestrated, or even to have known about, the fraud for it to be held liable.

As such, counter-fraud controls are now just as much about protection as prevention.

It’s with this in mind that I’ll be co-leading our fraud workshop at FRP’s upcoming Retail Conference in Central London on 25^th September. As part of the workshop, we’ll delve into the psychology of fraud and the structure of an effective counter-fraud programme. 

With valuable legal input from Harriet Campbell, Senior Associate at DLA Piper, we’ll discuss practical examples to demonstrate where risks may lie within retail operations – from unethical labour practices, corporate espionage, customer intelligence, and counterfeit products to misleading information. 

With the retail sector facing significant financial challenges and ECCTA now increasing brands’ exposure to risk, fraud prevention has never been more important. Investment to prevent theft on the shop floor has long been a major focus. It’s now time for white-collar fraud issues to receive the same level of attention.