The talk is of tough times this Christmas for retailers. And to keep the bottom line moving, they're not just being forced to whip up custom by e-mailing people loads of money-off vouchers. They're also having to keep an eye on their staff.

Shrinkage from crime or wastage now accounts for 1.24% of European retailers' turnover, according to the Centre for Retail Research. That equates to £19.6bn and in the UK nearly 40% of this is down to staff theft.

The influx of temporary staff at Christmas, armed with ever-more wily tactics, makes it a period of peak vulnerability. Greater use of technology means theft is no longer constrained to a few small items slipped up jumpers. Instead scams have become ingenious - and costly to retailers.

The refunds desk often provides the most profitable route for fraudsters. Refunds for items that were not actually bought or for more than the purchase amount are the two most common scams. But there are other more sophisticated scams.

Take fake gift vouchers. This is a classic Christmas fraud and one in which serious criminals are involved. Staff create counterfeit vouchers they then use to buy high-ticket non-food items. These are then either sold on Ebay or more commonly taken back to the refunds desk.

In the latter scenario, the "customer" is refunded with a real voucher, which is often exchanged for drugs. The dealers then sell the vouchers on at less than face value.

"Gift vouchers are seen as a form of currency in the drugs trade," says Drew Pedder, sales manager at prevention loss company IntelliQ.

The supermarkets' expansion of higher-priced non-food ranges has made them more susceptible to this kind of crime and new retailing models and technology have created what Pedder calls an unholy trinity of internal loss - refund abuse, discount abuse and credit card abuse.

One employee was able to exploit the sales system at a non-food supermarket, where the sales data were poorly tied into delivery data. He was able to refund the cost of items such as plasma TVs to his own credit card without disrupting the delivery, defrauding his employer of £60,000 before being caught.

This kind of fraud is almost impossible to detect, especially if the refunds go to more than one credit card. But these transactions always leave patterns, and the software provided by IntelliQ is specifically built to sniff out the patterns in EPOS data, says Simon Grant, MD.

This provides effective detection of sweethearting, or freebagging as it is known in the US, where the till operator only scans some of the items in a basket. "The amount of time taken to buy a £100 basket is pretty standard. So if we spot a very fast transaction, we know something is going on."

Some till operators get round this by having the barcode to a cheap item stuck to their wrist. Instead of scanning the item, they scan their wrist, and a £10 pack of razor blades is bought for 50p.

Other scams such as the abuse of staff discounts can be harder to detect. Staff lend their cards to friends and family or buy something using their discount, and then get it refunded at the full price. This can go into thousands of pounds with the member of staff posing as a member of the public in stores far from their own to receive the refund.

Although data mining is emerging as the big weapon in spotting abnormal transactions, physical solutions can also help. Checkpoint Systems MD David Nuttall is a fan of tagging, particularly soft tags concealed in packaging so the product appearance is not diminished. These can be automatically deactivated at the till so transactions are not slowed down. But he says retailers need to change how they view these crimes. "We need a change of culture. Technology by itself won't solve the problem, but it can help drive a cultural change and awareness. Retailers at the moment accept 1%-2% of their revenue being lost through shrinkage. Why? People in store need to take ownership."

Staff crime can have a significantly greater effect on the balance sheet than consumer crime, he adds. "With fake refunds in particular, the fraud creates a ghost stock item as well as taking cash out of the till. And because money is being taken, you're losing the cost of what it took to make that money in the first place. It means sometimes you're losing up to six times the value of the actual money taken."

This spring a report on the scams commonly deployed is published by the Perpetuity Group. In the meantime, retailers need to watch out for staff intent on helping themselves to a different sort of festive bonus.n