Business identity theft is a growing problem. At SAVIFY, we believe it’s our responsibility to help protect our clients and members. While our program already provides identity protection from the top names in the industry, they only protect individuals and their families, not businesses. That’s why we’ve teamed up with iDefend Business, the first and only provider of business identity theft monitoring and protection services, so our members can protect themselves AND their business without having to pay full price.
In this two-part post, we describe what business identity theft is and how owners can protect themselves and their business.
Scenario 1: A seafood supplier received an order for $500,000. After running a credit check, the order is filled and invoiced. The customer then calls, stating they never placed or received an order – and don’t know why they’re being billed. After checking the delivery address – it’s discovered it was a fraudulent order, and the business owner is out half a million dollars.
Scenario 2: A fast food franchise received a letter from the IRS stating they owed over $800,000 in payroll taxes. After checking their records, their taxes were filed correctly and all payroll taxes were paid, so they called the IRS to explain. It turns out that someone found their Employer Identification Number online and filed over 100 fake W-2s to collect tax returns. The franchise is working with the IRS to resolve it.
Scenario 3: A business owner received a phone call about an unpaid electricity bill for an office building they owned. Upon investigation it was discovered that they never received the bill, because someone sold the building without their knowledge! A fraudster falsified company minutes, made himself CEO, and sold the building out from under them. They were only able to stop the sale because they caught it so early.
About Business Identity Theft
These are three real-life cases of business identity theft. Unfortunately, it’s becoming more common. Thieves have learned that businesses make better targets than individuals, and the threat to business owners is immense. Inability to pay bills, meet payroll or tax obligations, loss of personal income, and negative credit reporting are just some of the potential consequences of becoming a victim. Worse case, the business fails. Business identity theft is scary, but you can protect yourself.
Business identity theft occurs when a thief impersonates a business for financial gain. Unlike consumer identity theft, where an individual’s information has to be stolen, business information is easy to obtain. In fact, it’s usually available for free online on the Secretary of State’s website. Business credit reports can also be easily obtained and are available to anyone. Once thieves have access to key business information, it’s easy to open new accounts, apply for credit, and even fraudulently sell assets. It’s also easy to change this information. For as little as $10, they can make themselves a board member, change the address, and even re-open a business that’s been closed for years.
For thieves, going after a business means more money for less work. Businesses have larger bank accounts and higher credit limits than individuals, giving thieves a higher payout for a single theft. Business bank accounts don’t enjoy the same level of fraud protection as traditional consumer accounts, so large purchases can be made without scrutiny. Buying 100 iPhones is not out of the ordinary for a business, and high end electronics like those are easy to unload for cash. Delayed invoicing provides ample time to sell stolen goods before the crime is even detected. Without strict security protocols and routine account review, businesses leave themselves vulnerable.
Unfortunately for businesses, there’s very little risk for thieves. Sophisticated criminals can easily hide behind technology while stealing passwords and placing fraudulent orders. A criminal across the world can install malware on a business computer in the U.S., gain access to all accounts, and commit fraud without ever being located. Since these crimes routinely cross state and national boundaries, they’re extremely difficult to investigate and prosecute. Even if the thief is local, in many places, identity theft laws only apply to consumers – making prosecution especially complicated. With so much to gain and so little risk, it’s no wonder going after businesses is so appealing.