Although identity theft should be mitigated via prevention and protection strategies, there will be times where it cannot be avoided. Personal information can be easily snatched by accessing a computer illegally. Even if you are cautious and guard your information, it is critical that you keep a close eye on your business financial accounts.
How Identity Theft Impacts A Business
When one hears the phrase “identity theft”, what usually comes to mind is the act of stealing someone’s identity. Unfortunately, as Mitt Romney famously said, “corporations are people, my friend,” business are the designated keepers of personal information. This includes bank accounts and tax ID numbers. In the hands of the wrong people, this sensitive information can be stolen and abused. This can include an identity thief posing as someone in the company as the one who has authority to make financial decisions.
Businesses are also a desirable target for identity theft since these types of organizations tend to have higher credit limits. They also possess sizable bank accounts, allowing them to make substantial payments to their vendors on a steady basis. The consequences of this attack would be greatly felt by a small business owner, whose finances are deeply immersed within the company.
The theft of an individual’s identity can also wreak havoc within the business. One of the most destructive consequences of identity theft is the sheer amount of time needed to call credit agencies and financial institutions in order to straighten things out.
A study conducted by Ponemon Institute LLC revealed that victims of identity theft had to take an average of 175 hours of company time in order to resolve their identity theft cases. Keep in mind that these issues can only be resolved during the week and during office hours. When divided by 8 daily working hours, this results in roughly 21 days where the employee is unproductive.
Furthermore, if an identity thief purchases an item from your business, using a stolen credit card, the owner of that card will be reimbursed that amount, once reported. This same victim may turn around and try to get that money back from your company, by way of friendly fraud.
More Elaborate Schemes
Identity thieves have gone so far as to disguise themselves as a business. One way thieves approach this is by monitoring a business’s registration information. If the company forgets to renew its license or registration by the deadline, thieves will pounce in, pay a small fee and renew these for them. But, they will also take the liberty to change the company’s contact information and board of directors. This will show on official documents that the thieves are now the ones running the business.
Another destructive scam that they can take part in is “address mirroring.” Here, the identity thieves will set up an office or a mailing address in the same building as the target business. This will create confusion and the thief will initiate contact with the victim’s vendors and banks.
The Best Course Of Action Is Protection
Without question, a business must be armed with the right protective mechanisms to ensure or at least minimize the possibility of identity theft.
Some of the steps you can take now to protect your business include: monitoring your credit, freezing your credit if you suspect unusual activity, monitoring your financial statements, and practicing good online hygiene by using strong passwords.