Most of us think of identity theft as a concern of consumers, and with good reason. Identity theft was the number one consumer complaint reported by the FTC in 2010, and privacy of personal data continues to be an important concern for end buyers, especially as businesses collect more and more information in order to drive personalization and marketing efforts. But it turns out that businesses are by no means immune from the phenomenon of identity theft. Read on to learn about how identity theft might affect your business, and what you can do to prevent it.
Business ID Theft: More Than Data Loss
Your business is likely familiar with the constant threat of data loss, where criminal activity leads to the leaking of consumers’ personal information, whether social security numbers or credit card information. Although data loss is a huge issue, business identity theft is a separate issue that can have even bigger financial consequences for any company.
In cases of business identity theft, criminals take on the identity of the business as a whole and use that information to open new lines of credit, which can then be used to purchase anything from cash-like gift cards to electronics. The thieves may then keep these goods or sell them for additional profits.
Of course, there are serious consequences of business ID theft. Unchecked theft can ruin your credit and drain your finances. Plus, your reputation with consumers is likely to take a hit, as well. After all, if you can’t protect your own identity, how are you going to protect theirs?
Why Attack Businesses?
BusinessIDTheft.org, an informational website maintained by the Identity Theft Protection Association, highlights a few reasons why identity thieves are turning from individual consumers to businesses. One of the most obvious reasons is that businesses have far larger accounts and better credit than your average consumers, so the reward is much larger.
Perhaps less obvious, but far more important, is another reason. It’s easier to steal and use the identity of a business. Critical information, like license numbers, addresses, and tax IDs, is often readily available. Businesses make large purchases way more frequency than an individual consumer; while one person ordering fifty laptops would raise countless red flags, bulk purchases of electronics and other goods aren’t out of the ordinary for a business.
Finally, small businesses are especially vulnerable due to a lack of security. While a large corporation may have a large accounting staff and a team of IT professionals who keep a close eye on financial data, smaller businesses may not keep as close an eye on credit card transactions and may not be aware of how to properly store or dispose of sensitive information.
Preventing Business ID Theft
Luckily, changes are happening on a federal and statewide level to tackle the problem of business identity theft. The National Association of Secretaries of State has set up a business identity theft taskforce to establish best practices and create regulations and support systems to halt this issue. But there are things you can do, too, to protect your business from identity thieves. Here are four tips.
- Use an ID theft protection app to keep close track of your finances and information. EZShield just released a new app called EZShield DashAccess, which monitors your business’ identity; creates a secure online wallet that can give you instant but safe access to personal documentation and accounts; and comes with fraud restoration and resolution service, to protect you in case of theft. Apps like EZShield make keeping track of identity theft risks far simpler than keeping a constant eye on accounts.
- Educate employees about sensitive data and common means through which thieves steal business information. Your team may not realize that a business EIN should be kept just as private as a social security number, or that any document containing an account number should be shredded when being disposed of.
- Frequently check in with monitoring organizations. Obtain credit reports at least quarterly, go over your bank accounts daily, and register with your Secretary of State or Corporations Division if they have any fraud protection services. Make sure to keep up with business filings and registrations, as thieves tend to go after businesses that have been deemed “inactive” or “suspended.”
- Be aware. Know what scams look like, and keep an eye out for any suspicious activity. Verify that any large or particularly unusual order made by a new client is actually coming from a legitimate business.
Business identity theft is no joke, and it can bring any small business or large corporation to its knees. By taking steps to avoid ID theft, you can protect both your business and your customers from criminal activity.
Has your business been the victim of identity theft? If not, is your business taking steps to protect itself?