Refund fraud is becoming one of the fastest-growing sources of loss for operators across the country. Industry data shows that refund abuse is rising, and the tactics are getting harder to spot. Many operators only catch the problem once the losses have piled up.
So the real question is this: What does refund fraud actually look like today, and how can you identify it before it turns into a bigger issue?
Employee-driven fraud is far more common than most operators realize. According to one industry source, employee theft accounts for roughly 75% of inventory losses in restaurants. This includes a wide range of internal scams, and refund abuse is one of the most frequent. (Agilence)
Below is a clear look at the two schemes we are seeing most often and how operators can stay ahead with better visibility and reporting.
1. The Internal Refund Scheme: Small Transactions That Add Up
One of the biggest questions operators ask is: How can I tell the difference between a legitimate refund and a suspicious one?
The challenge is that internal refund fraud rarely happens in large amounts. It often starts with a trusted employee who knows how your systems work. Instead of processing a refund for a customer, they redirect the money to their own credit or debit card. These transactions can look normal at first. They are usually small. They blend into daily activity. And they continue for weeks or even months without raising alarms.
What signs should managers look for?
• Repeated refunds to the same card number
• Refunds processed when the same employee is working
• Refunds issued without a matching customer interaction
This is why visibility matters. These transactions only reveal a pattern when you can see them grouped together.
2. The Impersonation Scam: Social Engineering That Targets Employees
Another growing issue comes from external scammers who target employees directly. The scams often begin with a phone call. The person claims to be IT support, a payment processor, or a district leader.
This leads to an important question: How do scammers convince employees to process fraudulent refunds?
They use urgency and authority. They tell employees there is a system error or a customer escalation that must be resolved immediately. Then they walk the employee through the steps to process a manual refund to a specific card number or through a digital app.
A simple verification step can stop this. Before processing any manual refund that feels unusual, teams should confirm the request with a known internal contact. That extra moment of verification protects both the employee and your business.
What Operators Need Most: Clear Visibility Into Refund Activity
Spotting refund fraud early depends on whether you can answer one simple question:
Are the same card numbers appearing in multiple refund transactions?
To help operators identify these patterns quickly, Envysion built the new Card Number View inside Reports. It gives managers and LP teams a simple way to review refund activity with clarity and confidence.
Here is how it supports faster investigations:
• The system identifies and groups partial card numbers that appear in refund transactions
• You can filter refunds by card number to see repeated use instantly
• Patterns that were once hidden become visible in seconds
Imagine pulling a report for the last four digits of a suspect card and immediately seeing every refund associated with it. This level of clarity gives operators a measurable advantage when addressing both internal abuse and external scams.
Take a More Confident Approach to Refund Fraud Prevention
Loss prevention leaders know that reacting too late is costly. The real advantage comes from being able to ask the right questions early, such as:
• What refund activity stands out today?
• Which card numbers are showing up again and again?
• Are there refund patterns that deserve a closer look?
With clear reporting and the right level of visibility, you can answer those questions with confidence.
Envysion’s Reports, including the Card Number View, gives operators the insight they need to catch issues early and protect their hard-earned revenue. When you equip your team with tools that reveal suspicious activity quickly, you stay ahead of evolving refund fraud schemes and keep your business secure.
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