Warnings about identity theft are all over the news. Even if you’ve never been a victim, you’ve probably heard stories of the financial loss, anxiety and time-consuming recovery that people face when someone steals their name and other personal identifiers. As damaging as personal identity theft may be, the impact of small business identity theft could be worse. The financial toll could rise to millions of dollars. A company’s reputation, its survival, and the livelihoods of its employees may be at stake.
You can protect your small business from identity thieves by being proactive. Here’s how you can address this potential risk to your business security.
Defining Business Identity Theft
Just as personal identity theft involves someone else pretending to be you, business identity theft is a type of fraud carried out by someone impersonating your business. It’s different from — though possibly connected to — an information security breach or the theft of a business’s customer data. According to the National Cybersecurity Society (NCSS), thieves could impersonate your business via a fake website, when filing taxes, when applying for financing, or even by ransoming your trademark.
How Thieves Steal Your Business Identity
Business identity theft is an attractive criminal enterprise because so much business information is publicly available. For instance, most states require businesses to post documents containing their sales tax and business license numbers. Business credit reports also include sensitive information, and these reports are more easily accessible to outsiders than the consumer versions. Spyware and other hacking tools can help criminals uncover more confidential information like your company’s banking credentials.
Goals of Business ID Theft
Of course, thieves don’t try to steal your business identity just because they think your health care practice is prestigious or your retail brand sounds cool. They’re after some sort of financial gain. For example, the objective may be to get a loan, line of credit or credit card in your company’s name, according to the NCSS. Some might use the information to create a fraudulent Uniform Commercial Code (UCC) filing, a legal document indicating a potential lien on your business. You should also beware of ID thieves who might try to steal your company’s money by impersonating one of your vendors with a fake invoice.
3 Ways to Protect Your Business ID
1. Guard your data
Make sure you have a strong password for your state’s business registry account. The password should be at least 16 characters long, and you should change it frequently, the NCSS advised. Sign up to receive automated alerts for any account changes, and set up two-factor authentication for access to the account, if the registry offers these services. Regularly monitor your files at the business credit reporting agencies and notify them of any errors you find. Finally, install firewalls on your business website for another layer of protection.
2. Verify your payments
Set up extra layers of approval before any wire transfers go through for your business. Check every invoice for a purchase order number that matches your own records. You can also verify that the address where you’re sending the payment is legitimate, and call a known contact at the business if you have questions.
3. Educate your employees
Train your employees to help them understand identity theft, recognize the red flags, and avoid missteps that can open the door to thieves. For instance, the NCSS said workers should be warned not to disclose sensitive business information to callers or post it on social media. You also should teach them to avoid phishing scams, which use emails to trick people into giving up financial account information.
If you need financing to cover employee training or other measures that will lower your risk of business ID theft, a small business loan may be a solution. You put a lot of hard work into building your business identity. Don’t let someone else reap the financial benefits at your expense.