Should We Be Worried About Business Identity Theft?

Should We Be Worried About Business Identity Theft?

You’ve probably seen an ad for personal identity theft protection at one time or another that warns about your personal details being stolen.

Identity theft can cause people to lose the ability to open new loans or accounts because criminals used their personal details to open up accounts they later defaulted on.

But individuals aren’t the only ones impacted by this type of illegal activity. Businesses are also the victims of identity theft.

In Canada, identity theft in general has continued to rise each year over the past decade, increasing from 2.37 thefts per 100,000 to 12.46 thefts per 100,000 between 2010 and 2019.

With more information online and accessible, it’s easier than ever for cybercriminals to impersonate a business to open up an account, just like they would for an individual. 

While network security measures can protect you from a breach, business identity theft is something completely different.

The impacts on a business can be devastating and result in:

  • Losses of millions of dollars
  • Ruined business credit
  • Liabilities for accounts opened in its name
  • Damage to business reputation
  • Inability to get necessary capital for their business

One example of a major loss from this crime is the CEO of a business identity theft protection company called Company Alarm. He started that company because he had previously lost US$5 million to business identity theft.

Why Are Businesses a Target of Identity Theft?

Easier Opening a Bank or Credit Account

Often, it’s easier for businesses to open an account at a bank than an individual because the banks may be eager to have their business. If a criminal has all the pertinent details, like a company’s name, address, CEO/owner’s name, and government issued business number, they can often forge documents.

This leaves a company owner with accounts opened in their business name that they may not know about until creditors start looking for them for loan defaults or unpaid credit card bills.

Access to Higher Credit Limits

Businesses can often get higher credit limits when opening a business credit card account than a consumer can get. This means that business identity theft can be more lucrative for a criminal, allowing them to get away with more money until their scam is found out.

Company Details are Easy to Obtain Online

Thanks to the internet, company details, which used to be harder to get are now freely available online. This includes public filings, ownership, and contact information. 

Many criminals can get all the information they need just by reviewing a company’s own website and looking through press releases and company directory information.

Small Businesses Often Aren’t Prepared

A business identity theft criminal isn’t likely to go over Facebook or Tim Hortons, they have teams of lawyers and extensive fraud security. However, small businesses aren’t quite as well prepared for this type of crime.

They often don’t have alert systems in place for use of their business identity and once theft is discovered, don’t have the same level of resources to prosecute the perpetrator as a larger company, especially if the criminal is overseas. 

Businesses Often Get Payment Terms

If a scammer is impersonating a business, they can often get payment terms of 30 days or more from a business. So, they could place a large technology buy in the company’s name, then have a month or more to offload the merchandise and disappear before the seller comes looking for their payment.

What Does Business Identity Theft Protection Do?

Like personal identity theft protection, business identity theft protection can’t stop the impersonation from occurring, but it can alert you as soon as it happens so you can mitigate the damage.

Often, time is of the essence when it comes to identity theft. The sooner you can let your bank and the law enforcement authorities know, the faster you can stop a criminal in their tracks.

Here are some of the services offered by companies that provide business identity theft protection.

Credit Monitoring

Credit monitoring activities look for any uses of your company information to open a loan account or credit card account. If found, you’re immediately alerted so you can shut down the activity.

Business Information Change Monitoring

Sometimes scammers will change business address or other information to gain access to a company’s sensitive information. Identity theft protection for businesses will monitor for these types of changes and alert you if one is detected.

Business Identity Theft Insurance

Some companies offer insurance against both business identity theft and data breaches. In the event of one or both, the insurance company has teams to assist in mitigating the damage and the policy will pay the costs up to the insured amount.

Start with Strong Network Protection to Safeguard Your Data

Criminals often gain access to company information for identity theft through hacking of a network. Haxxess can help your Northern Ontario business put the proper safeguards in place to protect your data.

Contact us today to schedule a free consultation! Call 705-222-8324 or reach out online.

stay in touch

Subscribe to our newsletter and we'll keep you informed about latest IT news.