Types Of Crimes Against Hospitality Business

Crimes against Hospitality Business

Criminal activity can occur in any industry, including the hotel and motel industry. Learn about the different types of crimes that can occur in hotels and how to avoid them.

Types of Crimes

Protection of guests and employees from outside threats, but hospitality managers also need to be aware of threats and criminal activities aimed directly at their own operation. The three most common threats are:

  1. Consumer theft of services, which involves a guest who leaves without paying a bill, or one who refuses to pay it.
  2. Fraudulent payment of a bill through the use of an unauthorized credit card (stolen, canceled, or revoked), a bad check, or counterfeit money.
  3. Internal theft of assets, committed by your own staff.
1. Consumer Theft of Services

When guests are legitimately unhappy with the level of service they have received during a meal or an overnight stay, they may become angry and protest all or a portion of their bill. As a manager, you must help calm the customer and fashion a solution that is fair to both the customer and the business. But when unprincipled and devious individuals consume services with no intention of paying for them the action you take will be entirely different.

The following Legally Managing at Work feature details some of the steps you should implement to help reduce the instance of food and beverage skips. Hotel room “ walks ” are best addressed at check – in, because it is impossible to know when hotel guests are leaving their rooms for a legitimate reason, as opposed to intending to walk their bill. Because this is so, employee intervention techniques are less successful in hotels than in a food and beverage situation.

The best way to limit the possibility of a guest walking the bill is to verify the guest ’ s payment information and identity at check – in. If the guest intends to pay by credit card, the card should be authorized for an appropriate amount. If the guest writes a check, the check should be authorized using the facility ’ s established policy. Some facilities also require a verifiable form of positive identification when a guest pays with cash or check.

2. Fraudulent Payment

The credit cards, cash, and personal checks are the most common forms of payment for hospitality services. Unfortunately, all three can be used fraudulently by deceitful guests.

1 Credit Cards

Hospitality operations should use a credit card verification service, even if credit cards are used infrequently for payment. These verification services charge a fee, but they guarantee that the business will receive its money for a legitimate credit card charge, even if the cardholder does not pay the bank that issues the monthly statement. In many cases, businesses face challenges with credit card holders who pay the full bill using their card but later voice dissatisfaction and protest all or part of that bill. Unless the guest can be placated, the business may well face the prospect of defending its procedures.

Each major credit card issuer has its own procedures, and hospitality managers should become familiar with those of each card they accept. It is also important that managers realize that credit card companies have a responsibility to both the hospitality business and the cardholder. To be fair to both, the card issuer will require a business to follow its procedures for accepting cards and billing for services. This is to ensure both that when a guest has a legitimate complaint, he or she is treated fairly, and that any fraudulent intent on a guest ’ s part is resolved in a way that protects the business.

2 Cash

Guests who use cash to defraud a business usually fall into two categories. The first is the so – called quick – change artist, an individual who intentionally tries to confuse or distract the cashier when tendering payment for a bill. The best defense against such an attempt is to instruct cashiers to take their time and make change carefully. Handling cash is confusing only when cashiers do so too quickly or carelessly. It is this type of cashier that the quick – change artist seeks out.

The second type is one who attempts to use counterfeit money to pay his or her bills. So, managers should enroll in one of the counterfeit – detection training programs generally offered by local law enforcement officials. And, if possible, those staff members who routinely accept cash for payment should also attend such instructional programs.

3 Personal Checks

In many hospitality businesses, personal checks are a popular form of payment, but their use raises a number of risks. Guests may either deliberately or through an oversight write checks that they do not have sufficient funds to cover. Also fraudulent customers may attempt to write checks on closed accounts, on accounts at nonexistent banks, or on a legitimate checking account owned by another individual.

Though there are services that can be used to pre-authorize the validity of personal checks, similarly to credit cards, these services do not generally agree to reimburse the business for the value of the check should it be returned as unpayable by a bank.

If a check is returned to you because the account either does not exist or has insufficient funds to cover the amount, contact your local law enforcement officials for help in collection. Accepting partial payment of the check ’ s original amount in exchange for not prosecuting the check writer is usually not a good idea.

Internal Theft of Assets

The internal theft of assets by employees generally takes one of two forms: the theft of financial assets, a crime known as embezzlement, or the theft of company property.


Guarding your business against embezzlement consists of implementing and maintaining financial controls that will verify:

  • Product sales receipts
  • Services sales receipts
  • Deposits
  • Accounts receivable
  • Accounts payable

For a detailed discussion of the procedures involved in income control, consult your accountant or one of the many cost control or income control books on the market today. One procedure many hospitality operators employ to protect themselves against embezzlement is to bond employees whose tasks include the handling of financial assets.

In addition to theft of a business ’ s financial assets, the hospitality industry presents opportunities for employees to defraud guests as well. Some common techniques in this regard include:

  • Charging guests for items not purchased, then keeping the overcharge.
  • Changing the totals on credit card charges after the guest has left, or imprinting additional credit card charges and pocketing the cash difference.
  • Overcharging, with the intent of keeping the excess.
  • Purposely shortchanging guests when giving back change, then keeping the extra change.
  • Charging higher – than – authorized prices for products or services, recording the proper price, then keeping the overcharge.
Theft of Company Property

The potential for theft of company property in the hospitality industry is high for the simple reason that employees can easily use so many typical hospitality – related items in their own homes. Food, trash bags, and guestroom supplies are common targets of employee theft. It is impossible to prevent every instance of employee theft, but best – practice preventative measures will reduce the number. These measures fall into three main categories:

  • Screening employees at the hiring stage.
  • Creating an environment that discourages theft.
  • Eliminating the opportunity to commit theft.

Theft, whether by guests or employees, greatly impacts your ability to operate a profitable business. While there are laws in place to help you protect your operation against theft, and perhaps even recover damages, it is important to understand that being the plaintiff in a lawsuit you initiate can be just as costly and disruptive as defending your business against. Thus, the best way to protect your operation is by establishing safeguards and procedures that prevent these types of activities from happening in the first place.

Conclusion : There are several ways that a crime can be committed against a hospitality business. It is important to stay vigilant and catch them before they do more damage.