HMV is cracking down on staff fraud and procedural failures after introducing a loss prevention system to analyse its transaction data.

Seven loss prevention officers have recently begun using Sysrepublic’s Secure system, to target shrinkage in the regions they cover.

The system is providing a return on investment, after being introduced just before Christmas last year, and was initially used by a couple of staff members who have helped to create bespoke reports tailored to the retailer’s risk profile.

HMV head of risk and loss prevention Colin Culleton explained that the hosted system has quickly picked up on problems with refunds, and is also providing fraud protection on transactions involving gift cards without slowing down transaction times.

As well as fraud, the system is also improving profitability by highlighting poor processes and aspects of staff training that need to be improved, such as the new VAT rate not being properly applied, or a three for £20 deal not being dealt with properly. Culleton said: “It is a very small minority of staff who look to commit fraud, and we have exceptionally good shrinkage rates as a business. Nine times out of 10 it is staff error or staff ignorance.”

He added that the company is just beginning to look at whether it should also analyse web transactions this way.

HMV previously did some loss prevention analysis using an in-house developed suite of data warehouse reports. However, Culleton said it was becoming labour intensive to drill down into the information this way, and normally required multiple databases to be checked.