Understanding what can happen helps you protect your business from business identity theft. Business identity theft can be a much larger crime than personal identity theft since businesses are more likely to have large balances and make larger transactions. Here are 3 types of business identity theft.
1. Impersonation of the Business. Just as you have a social security number, your business has its own EIN number. That number is key. You use it when you open a bank account, process W-9 forms, to report taxes and wages and you probably give it to suppliers when you enter into a contract or make a purchase. It’s just like a social security number – it identifies your business. All an identity thief needs is that number, your physical address and your legal name to open fraudulent accounts in your business name. Your address and legal name are part of public record making it extremely important that you protect your EIN. If your business identity is stolen, a thief can open new lines of credit and cash them out.
2. Using Owner and Employee Information. The people who are key to your business are another way a business identity can be used for illegal gain. If their identity is stolen and it is tied to the business, it opens a path for illegal activity. This is often a more extensive undertaking on the part of the thief. It may require ID cloning and the thief may actually impersonate the business owner or key executive in opening new accounts in either their personal name or in the business name.
3. Document and Credit Card Theft. One piece of paper may have the information a thief needs to start stealing from your business. It could be an employee. It could be the janitor. Or, it could be someone visiting your business who just happens to see the paper he or she needs unprotected on a desk. If that’ s not enough, it has been clearly shown that business identity thieves are willing to work as a dumpster diver looking for that key piece of paper. Credit card misuse can come from someone who has been given a card – a trusted employee – or it can come from a cloned card.
What can you do? First, keep careful records. Know which employees have access to a credit card or are cleared to make purchases on behalf of your business and track the use of the card and all purchases that are made. Don’t use unsecure computers for financial dealings or e-filings. Most of all, control the paper. Processes need to be put in place for the handling of sensitive documents. They shouldn’t be left sitting on a desk or in a stack waiting to be shredded. Consider hiring an on-site shredding company that will provide locked bins for holding papers waiting to be shredded and shred the documents right at your place of business under your watchful eyes. Keeping your business safe means planning and working to protect your identity.