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How to Avoid Becoming a Victim of Business Identity Theft

identity theft

Identity theft continues to be a major concern for everyone. Whether you have a million dollars in the bank, or you’re struggling to make ends meet, there is always the chance that a criminal can steal your identity and destroy your finances, your reputation and your future.

While the FTC estimates that more than 9 million people become victims of identity theft every year, individuals aren’t the only ones at risk. Business identity theft is a growing, serious issue as well. Businesses are attractive targets to identity thieves for several reasons. First, businesses tend to have larger bank balances and higher credit limits than individuals, allowing thieves to steal more — and usually without much scrutiny, since it wouldn’t seem odd for a business to order multiple computers or travel overseas. Businesses also tend to qualify for better payment terms than individuals: A thief may be able to order equipment or services using a fraudulent purchase order, which isn’t due for 30 days or longer. This gives the thieves plenty of time to disappear without a trace, leaving a business liable for the charges.

Given that the potential for significant losses is so high, and the fact that publicly available information makes it much easier for criminals to target businesses than individuals, it’s important for businesses to be aware of business identity theft and take steps to prevent becoming a victim.

Defining Business Identity Theft

Taking steps to avoid business identity theft first requires understanding exactly what it is. Business identity theft is not the same as a data breach or data leak. When a breach occurs, the cybercriminals steal information, such as customer payment information or trade secrets, which they then use for their own gain. Business identity theft involves criminals actually using information, usually a combination of stolen and legally accessed data, to impersonate the business as a means of stealing money, sabotage or competitive gain — or all of the above.

Preventing Identity Theft

Many of the tactics used to prevent individual identity theft are useful and can be used to keep thieves from stealing your business identity. Given the damage that an identity thief can do to your business, though, it’s important to ensure you have specific protections in place. To that end:

Employ strong security protocols to prevent unauthorized access to your business network. An active defense network that quickly identifies and contains suspicious behavior is best. Use firewalls to control Internet traffic and be sure to install all important security updates and patches.

Use data encryption to secure information both during transfer and while at rest. This not only protects customer data, but your business information, including EIN numbers, bank account information, tax filings and state and federal business filings, such as licensing or certification information.

Educate employees. Many business identity thefts begin with phishing emails or phone calls to unsuspecting employees, who unwittingly provide information necessary to steal the business’s identity. Train employees in how to handle requests for information via the appropriate channels, and to never disclose sensitive data without authorization and ensuring security. Only grant access to information or networks on a “need-to-know” basis; most employees do not need access to company tax filings or EIN numbers, for example.

Continuously monitor company accounts and credit files. Business banking agreements differ from consumer agreements, and generally have different requirements for reporting and handling fraud. For example, businesses often have less time to report fraud, fewer protections against fraudulent transactions and higher liability limits. The sooner you notice a problem, the greater the likelihood of limiting the damage.

Use the “Red Flag Rule” to protect other businesses and individuals. The Federal Trade Commission requires financial institutions and businesses deemed creditors to maintain an identity theft prevention program that includes a list of “red flags” that warrant further investigation, procedures for detecting those warnings, a protocol for handling the warnings and a plan for keeping current on threats. For example, a red flag might be an unusual number of purchases in a short period or an unexpectedly large purchase, or a call from another company to confirm information. Even if you aren’t governed by FTC rules, consider developing a red flag system in your business to help protect your customers and vendors from identity theft. Even if a purchase is legitimate, or the request for information was authorized, it is well worth the time it takes to confirm to help protect others from falling victim to identity theft — and they may do the same for you in the future.

As long as there is money to be made from stealing information from businesses, criminals will attempt to do so. Take the necessary precautions to keep your information safe — or you could pay a steep price.

 

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