Bento for Business recently rolled out two-factor identification, an important step to preventing small business identity theft. Identify theft is a real problem. Over 9 million people are targeted by identity thieves each year and the cumulative economic cost of the crime is in the vicinity of $60 billion. However, it is no longer just individuals who are being victimized, as nefarious elements have discovered that small businesses are easier and more lucrative targets. This is the primary reason why business owners should learn how to protect their businesses from identity theft.
Known as commercial identity theft, it has the attention of all crime syndicates around the world. Their modus operandi is simple and involves a very low level of risk. The identity of a commercial enterprise is hijacked and it is used to open lines of credit with retailers and banks. The goods bought through the practice are then sold or exchanged for cash.
Although the crime may also include illicit access and use of consumer data stored by the corporation, typically, commercial identity theft involves the impersonation of the business and the manipulation and falsification of its records, filings and finances. It is not only the owner of the venture who is at risk but also creditors, lenders, partners, financial establishments and suppliers are defrauded in the process.
Why are businesses being targeted?
Criminals are going after ventures of all sizes but the most at risk are small organizations, which may not be able to handle the ramification of identity theft. In fact, by the time the commercial identity theft comes to light, the business will usually be facing losses in six figures. What is particularly disturbing is the ease with which people are stealing corporate identities.
Generally, a business will have anywhere between $5000 to $10,000 to a few million in its bank accounts, while an individual will seldom have more than $500 to $1500. Also, a bank, upon verification, will extend a line of credit of about $500 to the average consumer while businesses are given $1000 or more just for opening a current account.
A corporate entity may also be offered a higher credit limit to the tune of $25,000 to $100,000. In addition, a commercial venture enjoys flexible payment terms on its invoices with suppliers. Larger purchases made in the name of a business often go unnoticed until the financial accounts are drawn at the end of the year. Small business identity theft is a real problem.
Preventing Offline Identity Theft
Bento’s new accounts team often finds fraudulent applications. We know to look out for it. The prevailing misconception about identity theft is that only businesses which work online are targeted. However, in reality, most cases of stolen identity can be attributed to information that is accessed offline. So, here are concrete steps that you can take to protect yourself.
Identity thieves often resort to rummaging through garbage to get the information they need. Shred documents with sensitive information. Another source of information is stolen mail. Minimize mail communication that involves the exchange of financial data. It would help to sign up to receive electronic statements for credit cards, bank account and bills that are linked to your business.
Never provide your EIN or your SSN or other personal information such as bank account and credit card numbers unless you have confirmed the identity of the business or the person asking for it. Yes, we are required by law to have that information to open an account, but you can call us or enter the information through our web site, and you will only need to give us that information when you get started with us.
If your credit/debit card is stolen, cancel it immediately. If a check issued is not processed within a reasonable time frame, talk to the recipient and consider canceling it.
Finally, if you are at the point of dissolving or selling your business, contact the financial establishments that carry out your transactions and let them know of this. Also, get in touch with the credit reporting bureaus and let them know that you will no longer be applying for credit.
Preventing Online Identity Theft
There are three things you can do to reduce the risk of identity theft from hackers. The first is setting strong, unique passwords for each website. This won’t prevent all identity theft, but it will keep out some. We use LastPass internally to generate and store passwords; our engineering team also likes 1Password. These apps will save you from having to memorize passwords or writing them down.
If you forget a password, you can use a website’s password reset function. And that brings us to our engineering team’s second recommendation: set two-factor authentication. If you forget your password or use a new computer, two-factor authentication will help ensure that it is you doing the reset. Although it can be annoying to wait for the text code you need to use, it is far less annoying than dealing with identity theft.
Third, secure your wireless network. You’re probably using a WiFi connection in your office. Make sure it is password protected to prevent unauthorized access, and set up a separate network for visitors to protect the network with your business data.
Check with your commercial insurance policies to see if cybercrime are covered. If not, consider adding that protection to reduce the costs of any briefings.
Monitoring Your Identity
- Make sure you regularly check the credit report of your business and if possible opt for a credit monitoring facility.
- In a lot of states, the office of the Secretary of Business will have an email notification service. Check if this service is offered where you live and subscribe to it.
- Sign up to receive email alerts for all financial transactions.
- Keep an eye on your bills and accounts. If you see an unexpected charge or if a regular invoice does not arrive on time, contact the bank or the billing company as required. Many thieves start with one very small charge, hoping you’ll ignore it; if you do, you will soon receive larger and larger charges.
If You Are A Victim of Identity Theft
If you find identity theft, here is what you can do to stop the criminals in their track:
- Immediately connect with your bank, lenders and credit card providers and make them aware of the theft.
- Contact credit reporting agencies and report any discrepancies at once. Get in touch with Equifax (91-800-525-6285), TransUnion (1-800-680-7289), Experian (1-888-397-3742) and Dun & Bradstreet (1-800-234-3867).
- All of these bureaus have a fraud department. Speak to them so that a fraud alert can be put on your records. This way, creditors will be asked to contact you before opening any accounts in the name of your business.
- Look for discrepancies in the use of the EIN of the hijacked business. Report these to the credit reporting agencies.
- File a complaint with local law enforcement.
- Get in touch with all your creditors, suppliers and billing companies and notify them of the identity theft.
- Keep all records and correspondences between you and the agencies mentioned above.
- Continue to monitor your credit report and your bank accounts.
You may also need to notify your customers; you can learn some best practices here.
Bad actors can cause you a lot of problems. Taking some effort to prevent identity theft now can save you headaches and money down the line.