June 08, 2023
6 min read

Fraud at Self-Checkout Is a Risk, but It Doesn’t Have To Be

Self-checkout is a popular shopping option, and its influence is continuing to grow. According to shopper intelligence firm Catalina, self-checkout makes up 38% of checkout lanes in U.S. grocery stores. This option is ideal for contactless shopping, and, oftentimes, self-checkout minimizes wait times in store.

Furthermore, self-checkout is also proliferating due to the labor savings it can provide retailers. The retail industry is still facing a labor shortage. In fact, Forrester and Work Jam recently found that 63% of retailers faced a front-line labor deficiency in the beginning months of this year. Self-checkout provides an unmanned checkout experience that mitigates the extent to which this labor shortage negatively impacts shoppers.

Despite the growing need for self-checkout, these checkout lanes can be a risk for retailers. The unmanned lines experience higher rates of fraud and theft than their traditional staffed counterparts. Yet, GK is prepared to help retailers seamlessly and quickly deploy more self-checkout technology, while helping plan to reduce the risk of fraud.

Let's dive into why theft is higher for self-checkout options and what retailers can do about it.

Why Self-Checkout Fraud is Higher Than Other Points-of-Sale

As we all know, fraud is more common at the self-checkout line. In fact, nearly one in five shoppers have intentionally committed fraud at this point-of-sale. And, according to the Loss Prevention Research Council, 58% of consumers said theft was easy or very easy in self-checkout lines.

The motivation for this type of theft may vary from shopper to shopper. Some shoppers may feel less remorse sneaking an item into their bag in this checkout process than they would in front of a human cashier. Others may avoid scanning an expensive product due to their concerns about cost or inflation. Lastly, some shoppers simply relish the chance to operate unwatched.

The Different Forms of Self-Checkout Fraud

There are a few common types of fraud committed via self-checkout lines.

Sometimes a shopper scans an inexpensive item, like a banana, while actually putting a more expensive item, like a steak, in their basket. Other shoppers may try avoiding the scanner altogether and leave an item in their cart throughout the checkout process. Some shoppers may even swap price tags on products of a similar weight.

Regardless of the chosen method, self-checkout fraud is a major problem for retailers nationwide.

How Retailers Can Use AI to Stop Self-Checkout Fraud

The trick to stopping fraud is to implement self-learning technology that goes beyond rule-based fraud systems. These AI-driven tools can determine when a fraudulent act is more probable and issue a recommendation for a rescan or an employee-assist.

The self-checkout kiosk can be equipped with fraud detection tools that use scoring algorithms to determine the probability of fraud for any shopping basket. In a simple example, if the number of items in the cart doesn't match the time spent scanning or the basket total, the system will flag the basket and recommend a rescan. There are many more ways that AI-based tools can spot potential fraud, in real-time, right at self-checkout. What's more, any alert on the point-of-sale itself may deter bad actors.

As a result of this technology, retailers can detect a higher percent of theft and fraud while reducing the number of unnecessary rescans for customers who are using self-checkout properly. This is an important goal, because prompting re-scans can frustrate a loyal customer and negatively impact sales. By ensuring that only bad actors are flagged, retailers can create stronger customer relationships with loyal shoppers, while cracking down on profit loss from fraud.

GK Helps Lower Risk

GK Artificial Intelligence for Retail (GK AIR) Fraud Detection is designed to use AI to adapt to new types of theft and fraud and continuously equip retailers with the data and insights they need to protect themselves. By increasing the accuracy of rescan requests, retailers will be able to defend their margins while ensuring loyal customers have the best shopping experience.

To learn more about using AI to stop fraud and theft at self-checkout, contact us today.