Hank just loves his new job as a sales clerk at the local classy department store, Fashion’s My Style®. It’s a great way for him to earn a few dollars while attending high school. Not only does his job pay quite well, but it allows him to receive discounts on all his clothes. Because Fashion’s My Style® is the coolest place to shop, Hank sees many of his friends while he is working. He has found that, in addition to enhancing his social standing with his friends, he can supplement his income by selling items to friends at a price far below market level. Hank does this by taking additional markdowns and discounts off at the register. For doing this, his friends pay him a portion of the savings as well as allow him to come to all their parties.
1. What type of fraud is Hank committing?
2. How could the company find out that this is occurring?