Starbucks exec: security from employee theft important when implementing gift card strategies

Nation's Restaurant News, Dec 12, 2005 by Ron Ruggless

The electronic stored-value gift cards increasingly being red by foodservice chains represent greater liability well as greater opportunity for sales, some operators suggest.

"There is huge exposure out there," said Phil Hummel, director of compliance for Starbucks Coffee. He explained that in handling gift cards, unethical employees could substitute a blank card for one that has been loaded with a dollar value.

"The customer is the one that has the negative experience," he noted. That's the case, he said, because a guest could present a card with a $20 value to make a purchase for less than $20 one day only to suffer such a swap and find out later that the card handed back by the larcenous store employee had no value.

Employees can pocket cash from noncard transactions and use a purloined gift card to cover the payment, according to Hummel, who recently spoke on "What Every Hospitality Executive Needs to Know About Loss Prevention" during FS/TEC 2005 in Grapevine, Texas.

Hummel indicated that detecting such fraud can be difficult because "there is no visibility from an operational standpoint," but there are some workarounds. Among them, he noted, are the use of transaction data analysis technology, such as the XBR tool by Datavantage, which can be programmed to detect multiple card redemptions in a single day and other telltale activities.

Among other rules-based, POS-transaction-monitoring technology or services that may offer protection against gift-card fraud are POSiWatch by In*Sight Commander Systems Inc., Restaurant Vision on Demand by SmartConnect, SecureAlerts by xpient Solutions and a joint offering from Hospitality Solutions International and StarStat.

* Scenes or words from the annual International Foodservice Technology Exposition produced by Nation's Restaurant News and Robert N. Grimes of Accuvia.