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Wed, August 23, 2017 Twitter LinkedIn

Compliance Training Blog

Security is everyone's responsibility

Identity Theft Protection

Identity theft is one of those things that, although we’re all aware of it, we believe that it won’t happen to us. However, with an estimated 8 to 12 million victims annually, it’s evident that criminals have found identity theft to be easy, lucrative, and low-risk. These criminals realize that businesses also have identities that can be stolen, and unsuspecting businesses can be easy targets.

Being informed is the best way to avoid having your identity stolen and the resulting consequences. Read on for more information about what identity theft is, how it happens, and how you can protect yourself.


What is Identity Theft?

The basic definition of identity theft is the fraudulent acquisition and use of a person’s private identifying information (such as a Social Security number), typically to obtain money or credit.

Types of Identity Theft

There are over 25 different types of identity theft that can occur, but they can be broken into three categories:

Financial Identity Theft

Most individuals and businesses have some degree of established credit. Financial identity theft allows criminals to manipulate new or existing financial relationships. Businesses typically maintain larger bank account balances than consumers, which makes them an appealing target. Additionally, it can be easier (in some cases) for a business to open a new account or line of credit than a consumer, and with a higher credit limit.

Businesses often enjoy flexibility in payment terms that allows them to receive goods or services without having to pay for them right away. This allows criminals a window of opportunity to get products under a business name without the threat of immediate detection. Also, large purchases made by businesses might not be scrutinized as closely as they would be if a single consumer were to make them.

Criminal Identity Theft

If an imposter commits a crime in your name, it is much more difficult to clear your name than it is with financial fraud. Also you might have to bear significant legal consequences from the actions, requiring much of your time and energy as well as your finances.

Other Types of Identity Theft

As an employer, you might have to deal with an imposter gaining employment at your company using someone else’s name. This can lead to issues with the Social Security Administration (SSA) and the Internal Revenue Service (IRS). Some other types of identity theft and fraud that could affect your business include commercial loan fraud, investors’ fraud, insurance fraud, workers’ compensation fraud, and money laundering.

How Identity Thieves Gather Information

Unfortunately for companies, especially small businesses, thieves have relatively easy access to the information they need to impersonate you. Small businesses may lack the security and oversight needed in accounting or IT departments to catch identity thieves.

In most states, businesses are required by law to post documents that contain some of their key identifying information such as sales tax identification, business license number, and/or other items. These types of information are available either publicly or can be purchased legally. For example, state business registration information is public record, and it contains information such as structure, owner(s), officers, directors, registered address, and sometimes even copies of the owner’s signature.

While consumer credit reports are protected, business credit reports can be ordered by almost anyone, since they are intended to foster and promote commerce. Business credit reports contain information that can be misused by business identity thieves.

Your business has an Employer Identification Number (EIN), which is basically a Social Security Number (SSN) for your business, but it doesn’t have the same protection that an SSN would have. Many business identity thefts occur — and false accounts are opened — with only a business name, EIN, and address.

Finally, an internet black market exists that contains stolen confidential information from millions of consumers and businesses; this information is sold, traded, and purchased every day.

What Happens if You’re a Victim of Identity Theft

According to the Uniform Commercial Code, businesses have a shorter time frame to report fraudulent transactions. Wire transfers and ACH transactions can occur quickly, and thieves are prepared to withdraw funds as soon as they are available. Because of this, it’s vital that you make protecting your business’ cash accounts your first priority.

If check fraud has occurred using your business’ name, you could be reported to the check verification companies used by merchants, and your business consequently might be denied check writing or checking account privileges.

Credit cards opened or used under your business name should be reported right away to the credit card company’s fraud department. The compromised cards will be closed, and new cards will be re-issued.

How to Avoid Identity Theft

  • Develop and implement a protection plan to protect your company’s identity.

  • Keep your company’s documents in a safe and secure location. Shred any unnecessary information and documents before disposing of them, especially if they contain personal information or identification numbers.

  • Don’t fill out forms online that require identifying numbers if you can avoid it. If you must use identifying numbers, make sure the website is legitimate and secure.

  • Monitor your business’ credit reports for fraudulent activity.

  • Ensure that employees complete Security Awareness Training so that they are informed about, and familiar with, identity theft practices, as well as how to best implement internet safety.

Staying informed and protected can help you avoid business identity theft. Global Learning Systems provides multiple courses for you and your employees that will help keep your company secure from online threats. Contact us today for course information.

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