Business identity theft works the same way it does for individual victims of identity theft — information about a company’s identity is seized and used to acquire credit in the company’s name. The criminals then go on a spending spree for electronics and other items they can quickly sell for cash.
The damage can be devastating to individuals and businesses. A small business that’s the victim of business identity theft can lose the ability to acquire credit, and its operations could be threatened while the owner tries to clean up the financial mess.
The problem is only getting worse. A 2014 survey by identity theft and fraud protection firm
CSID found that the number of attacks against small and mid-sized businesses increased from 18 percent in 2011 to 31 percent in 2013.
Here are some steps to take to help fight business identity theft:
- Use an EIN
Small businesses that operate as a sole proprietorship sometimes use the owner’s Social Security number for tax identification purposes. Instead, they should use a separate employer identification number, or EIN, that can easily be obtained online through the IRS. Keeping business and personal finances separate is a good practice, especially for identity theft protection. Using an EIN won’t tie the identity theft to the victim’s identity if the business identity is stolen.
Keep company documents and records in a safe and secure location, such as a secure mailbox or a safe. The same goes for duplicate documents. Shred documents you don’t need, such as credit card offers and other unnecessary paperwork that could give fraudsters access to your business or allow them to open credit lines in your business name. For sensitive files you have online or on computers, install firewalls and anti-virus and anti-malware technology. Check with your Internet service provider on how they protect your data, such as third-party security vendors it uses and how they protect certain types of content, such as email attachments. Ask your vendors how they’re protecting customer data you’re giving them.
- Internal Controls
Restrict employee access to certain documents such as customer lists or accounting files. Require employees have passwords to get to such data if they need it. Have a protocol to follow if there is a data breach. This can include assigning someone to manage the breach and outlining actions to be taken. Retail business owners should review security footage for suspicious activity, such as an employee taking a customer’s credit card away from the register to run a transaction. Check credit card terminals or ATM kiosks for skimming equipment.
- Employee Devices
Workers will likely bring their own devices to work, including phones and computers, and these could pose business identity theft problems. They should be password protected in case they’re lost or stolen and someone tries to access sensitive company information. PayPal and other mobile payment systems allow a card reader to be connected to a smartphone or tablet. Business owners can protect themselves by using a mobile payment system that uses strong encryption methods and devices that require the highest level of authentication available. Each employee who uses a tablet with a mobile payment system should have a separate password so that no one has access to any information but their own.
- Check Accounts Often
Stopping fraud before it happens is the easiest way to prevent business identity theft. You can do this by regularly monitoring your credit and bank accounts and checking the three major business credit bureaus. Email alert notifications from monitoring services will give you a security alert in real time if there’s new activity occurring on your company credit files. Some credit and debit cards for businesses have zero liability for unauthorized transactions, along with multiple layers of security.
If you think your business is a victim of business identity theft, contact your local law enforcement agency, business credit bureaus and your company’s credit and bank providers to report the theft. Reporting it as soon as possible can help limit the damage.
