What to do when employees commit credit card fraud

waiter restaurant bill credit card


Dear Advice Guy,

We found out an employee was stealing hundreds or thousands of dollars from guests by someone calling with a credit card discrepancy. We went through five random days he worked and found over $250 in falsified tips. We were told we were unable to press charges since he did not steal from us. We have a procedure going forward to avoid this happening again. However, is there anything we can do?

– Banquet Manager, TX


While you may not be the victim in this case, you want to make clear that you had no prior knowledge of your employee’s behavior, are standing by your guests, are fully cooperating with investigators, and will turn over any receipts or other documentation.

Laws vary by state but in general your best bet is to work with your attorney to collaborate with the local police, who may in turn decide to involve the Federal Trade Commission (FTC) or other authorities to do an investigation of the employee. Even adding pennies to checks can add up to a significant amount over time and there are numerous cases of servers doing jail time for this behavior.

Let’s call this for what it is: fraud. It is good you discovered the problem and put the controls in place for future prevention.   In the meantime, it is important you consult with your attorney to protect yourself from any suggestion that negligence or poor management on your part enabled the crime. A cornerstone of hospitality is safety so it’s vital that guests feel their personal information and intent to tip is honored, respected and appreciated by you and your team.

More on tip fraud here and here.

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