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.
How can anybody steal the identity of a corporate establishment?
Known as commercial identity theft, this is a relatively new type of crime. However, it has managed to get the attention of all crime syndicates from street gangs to drug cartels. 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.
There is simply a lot more money at stake when a commercial house is the victim of the identity theft. 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 a $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 will 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. What’s more is that few small businesses bother to protect themselves against identity theft while some are completely oblivious to this type of crime.
How can you protect your business from identity theft?
There are several tips for preventing such a crime and even for protecting your interests in case identity thieves have tried to steal your corporate identity. However, like with all other criminal infractions, there is no foolproof method to safeguarding your interests. So, this will have to be a continual effort on your part. The goal should not only be to prevent the theft of identity but also to catch it quickly if it has already taken place.
Preventative tips on how to protect a business from identity theft
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.
Step 1: Identity thieves generally resort to intercepting mail and rummaging through garbage to get the information they need. Therefore, it is imperative to maintain all records and documents that you need to run your business in a safe location.
Step 2: All paperwork that has any type of financial information on it and which is not required should be destroyed completely. If you have not already used the shredder in your office diligently, take stock of the documents that you keep in your office and start segregating them into “required” and “destroyable” categories.
Step 3: 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.
Step 4: 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.
Step 5: If your credit/debit card is stolen, cancel it immediately and if a check issued is not processed within a reasonable time frame, talk to the recipient and consider canceling it.
Step 6: 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.
How to protect a business from identity theft online
While selling, buying or communicating over the internet, employ the same common sense tips when it comes to the exchange of information. Do not share sensitive financial data through email or web based services. If you are using a website to make purchases, make sure that you only deal with secure sites. You can check links by using www.siteadvisor.com.
Password protection: Have a unique password for every site that you do business with and for online access to your bank accounts. There is no need to think up unique pass codes when you can use services such as Perfect Password and Norton Password Generator for free, to generate nearly unbreakable passwords.
Use software for keeping track of the passwords: Instead of trying to remember all the pass codes or storing them on your computer from where they can be accessed, you can use a program such as Password Tracker Deluxe that will store your username and passwords securely. It is free to use up to 10 passwords and can be bought for $19. Using a spreadsheet in Google Drive is another good option to keep track of your passwords and usernames. It’s free but you must keep in mind that it’s not as secure as using software specifically made to keep your passwords safe.
Secure your computers: Always use antivirus programs on all the machines that are being used for work. You will find a range of decently-priced options such as Webroot Secure Anywhere AntiVirus or McAffee.
Use a program specifically designed to thwart identity theft: LifeLock is one such service that offers multiple levels of protection from identity theft. From monitoring fictitious identities created in your name to scouring through court records against the business owner or entity, they do it all. Annually, the service can cost between $109 to $329, depending on the features of the account.
Secure your wireless network: You’re probably using a WiFi connection in your office. Make sure it’s password protected to prevent unauthorized access.
Monitor financial activity to spot instances of identity theft
- 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.
What is at risk here?
The theft of corporate identity can have serious repercussions that can quickly turn your business dreams into a nightmare. The losses can be devastating financially and create a PR debacle that your venture may not be able to recover from. Any attempts to undo the damage will also carry costs that run into thousands of dollars.
Furthermore, once your bank accounts are wiped out of cash, you may not be able to meet your payroll and creditor obligations. To add to this, banks and suppliers may not be sympathetic to your plight and you may face personal liabilities. Not to mention that you will also have the IRS chasing you if identity thieves have registered a new company in your name. There is also the risk of negative credit reports. In other words, a small business which is being operated on thin margins will never be able to survive the blow.
What if you are already the victim of commercial identity theft?
If your identity has already been stolen, 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.
With all the tips above, you should be able to keep your business safe and secure, or at the very least, prevent a theft from getting any worse. Happy securing!