Products for Sale

Protus3 Fraud, Security Program Development


An employee comes to you and tells you that her uncle bought some of your company’s products at a very good price. The employee asks how he could make the purchase at less than the employee discount. That afternoon, you receive a call from the local police department. They report that some of your company’s products have been spotted at a local flea market, and they want to know if those sales are authorized. What would you do?

If you are not responsible for security at your facility, forward the information directly to that individual or to a member of upper management. A successful theft investigation relies on discretion, so forward all information directly to a single contact.

For the person responsible for security, if law enforcement is already engaged, begin by determining if the products for sale are genuine products or imitations and by determining if these sales are part of an authorized process. Request that law enforcement conduct the investigation into how the product is being diverted and offer to support the investigation and the criminal prosecution of those responsible in any way. If case load or availability prevents a timely response from law enforcement, consider hiring a competent private investigator with demonstrated experience in cases of this type. The investigation in to the allegations is important and should be handled by professionals as sensitive personnel, civil, and criminal information will be involved. Upper management and legal counsel should be involved in assisting in the investigation whether private or public, limiting those aware of its existence to a “need to know” minimum.

It is important to establish policies and follow procedures to prevent thefts from occurring or to aid in any investigation if necessary. The specific measures will depend on the type of facility, whether manufacturing, distribution, or a combination.

  • Have inventory control procedures in place and verify that they are being applied correctly.
  • Use access control technologies and cameras effectively.
  • Separate the shipping and receiving function.
  • Develop policies for returned or damaged goods.
  • Limit access to the building to reduce the potential for outside theft. This includes main entrances and dock doors.
  • Move employee parking away from the building to reduce the potential for internal theft.
  • If small products are involved, do not allow employee personal belongings such as bags, purses, or lunch containers in work areas.
  • If the facility manufactures products, develop policies to compare the amount of raw materials versus finished goods. When determining waste tolerances, consider the quantity of product, the cost of raw materials, and the final value of finished products.
  • If the facility manufactures products, develop policies to address second quality or “off-quality” products. An employee purchase program is a potential source of abuse or theft if not managed properly.

Plan. Protect. Prosper.

Protus3 specializes in security system design, security consulting, corporate investigations and other investigative services. Partner with Protus3 and we will examine each situation to identify threats and develop solutions for your best outcome.

919-834-8584 or 800-775-8584