Understanding the risk of identity theft to your business will help you take the appropriate measures to protect yourself from identity fraud. Many businesses don’t protect their data properly, leading to data breaches and a loss of customer trust. Here’s what you need to know about identity theft and how it relates to businesses.
What Is Business Identity Theft?
Business identity theft refers to when scammers obtain a business owner’s personal information to pose as them. They use that information to open credit lines, illegally use the business owner’s existing credit cards, take out loans, or obtain tax refunds and other benefits.
Once a hacker has access to your personal information, there's a lot they can do with it, even posing as you to open up fake office locations and scam customers.
Another type of business identity theft is when thieves target your customers instead of you. If a hacker can obtain sensitive customer data, such as credit cards and social security numbers, they can access bank accounts, take out loans, and more. That’s why protecting the private information of customers is so critical.
How to Protect Your Business from Identity Theft
Identity thieves typically obtain personal information through several methods. Some take advantage of weak security controls to hack into your system, while others rely on moles inside your company willing to sell you out. Here are the best business identity theft protection practices.
1. Take the Right Online Security Measures
Business identity theft protection starts online. A system lacking security is an easy target for hackers.
Using strong passwords and activating two-factor authentication is a start. For added security, use an authenticator app instead of SMS-based 2FA, as text messages are subject to sim swap attacks.
Install firewalls on your network and use antivirus software to scan and monitor your devices for breaches.
Employee mistakes are a common factor in business identity theft, so employee cyber security training is crucial. Employees who aren’t trained in the best online safety practices may click on malicious email attachments or links sent to target your business, or they may enter sensitive passwords on public Wi-Fi networks.
2. Encrypt and Protect Your Data
It’s not just your online data you need to protect but also any data kept offline. Some identity thieves break into offices to steal laptops, hard drives, and even documents that can reveal sensitive business and/or customer information.
Make sure employees know to turn off and lock their computers when leaving the office. Encrypt your hard drives and CDs, and keep important documents in locked filing cabinets. Ensure you install a solid security system, complete with cameras and alarms, in your office.
3. Restrict Access as Needed
Many cases of data breaches occur due to employee misconduct. Employees who have access to customer information they shouldn’t have can sell that information or use it for their gain.
By setting user access permissions and only providing passwords to the right employees, you can protect sensitive customer and business data. In the office, you can use key cards to restrict access to certain rooms or files.
When employees leave the company, make sure to change passwords and delete their accounts as needed.
4. Choose Your Vendors Carefully
If you’re working with vendors who will have access to credit card details or other customer information, make sure they can be trusted. Furthermore, make sure they have the right security features in place.
5. Use an EIN
Using an EIN for your small business instead of your social security number will protect you in case your business suffers identity theft. Furthermore, keep your finances separate, using your EIN to apply for a business credit card.
What to Do if You’re a Victim of Business Identity Theft
If you suffered business identity theft, find out what information has been stolen and what the thieves have done with the data. You’ll need to inform customers if their information has been exposed. If the thieves used your identity to pose as your business, you’ll need to freeze your accounts and report the theft.
How to Report Business Identity Theft
You’ll also need to contact your banks, creditors, and the three major credit bureaus to ensure they know about the theft. That way, they can freeze your accounts, help you recover fraudulent charges, and help you fix your credit score.
Finally, report the theft to law enforcement. Also, look for state resources on identity theft, and notify the appropriate state department, so you can correct phony business information.
Business Identity Theft Cases
Let’s talk about some business identity theft examples that recently occurred.
- Cash App recently suffered a data breach of customer names and portfolio details due to a former employee downloading information.
- Equifax suffered a data breach a few years ago in which hackers obtained the records of almost 150 million Americans.
- Two thieves in Pennsylvania bribed hospital employees to provide forms with sensitive patient details, using those details to fraudulently obtain more than $250,000 in tax refunds.
Business Identity Theft Statistics Of 2022
Here are some updated statistics that underline the importance of preventing business identity theft.
- According to the Identity Theft Resource Center (ITRC), identity theft cases in the first three quarters of 2021 exceeded cases in all of 2020 by 17%.
- According to the Insurance Information Institute and the FTC, 2020 saw a 114% increase in identity theft complaints compared to the previous year, as well as a massive increase in monetary losses due to identity theft ($3.3 billion compared to $1.5 billion).
- Someone is the victim of identity theft every 14 seconds. Many of those cases are driven by business identity theft.
Monitoring your business for sudden credit report changes or inaccurate tax returns can help you detect ID theft and prevent losses. You can also get business identity theft insurance to help protect you from monetary damages as a result of ID theft. Check out these other types of business insurance as well.
If you’d like your business to succeed, check out this post on how your business can survive a recession.
About the Author, Madison Taylor
Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.