The Internal Revenue Service (IRS) reported an increase of 2.75% in fraudulent business tax returns, indicating a disturbing trend in business identity theft. Unfortunately, small to medium businesses - compared to larger corporations - tend to be primary targets in identity theft due to their lack of security and fraud protection. Keep reading as we cover the ins and outs of business identity theft and discuss the steps you can take to protect your business.
Business identity theft is a type of identity theft in which someone or some entity creates or attempts to use a business’s identifying information without authority and with the intent to defraud or hurt the business in some way. The National Cyber Security Society (NCSS) has identified the following four primary types of business identity theft:
Business identity theft can lead to a variety of negative outcomes, and it’s become a growing problem as technology evolves and more business information is accessible online. These issues include problems with vendor payments, negative credit reports, state and federal tax disputes, and damage to a business’s overall reputation.
Common schemes used by criminals to steal a company’s identity include, but are not limited to, the following:
Sending a fake invoice for goods or services that you never ordered, or a duplicate of an invoice that you already paid:
These invoices may come in paper format, over email, or in the form of a phone call and can be used to both get a payment from your business or obtain your company’s billing information.
Establishing temporary office locations or accounts under your company’s name:
This makes it possible to redirect your company’s traffic or vendors to their temporary location and allows them to redirect your mail, file for tax returns, and more under your name.
One primary tactic to be on the lookout for are phishing emails and phone calls. Any email or call that appears to have come from an official source, but which is asking for financial information or other identifying information related to your business should be handled with skepticism.
Posing as a credit card processing company:
Since so many small businesses rely on credit card processing services, criminals are able to pose as these companies in order to obtain a business’s financial information, later exploiting it for their own purposes.
Going through your company’s trash:
If you don’t shred documents with vital information on them, thieves can gain access to enough information to pose as your company just by going through your garbage.
Asking for membership or service fees:
In this type of scheme, the thief poses as an official organization requesting that you pay a service fee or renew a license. If you comply, they then have access to your organization's financials.
Filing fake documents with the Secretary of State:
This may include change of address forms, change of name, and more, and gives the thief a stronger foothold to pose as your business.
Many signs indicate your business may have had its identity stolen. Some key red flags are the following:
If any of these signs occur, you should investigate further. A good place to start is by getting a copy of your business credit report and performing a thorough review of all business accounts to look for unauthorized activity.
If you find evidence that someone is using your business’s identity for nefarious purposes, the next step is to take action. Immediately notify your bank and any creditors of what has occurred. They can help track down unauthorized transactions and also put a stop to any future ones. You should also report the issue to all of the business credit reporting agencies, including Dun & Bradstreet, Equifax, Experian, and TransUnion.
Next, collect any documents that show fraudulent activity, including tax returns, bank statements, and emails, and notify local law enforcement officials. If the thieves made any changes with the Secretary of State or the IRS, you should immediately contact both to correct the issue. The IRS has procedures outlined on their website that inform business owners exactly what to do if this has happened to them.
It’s always best to take protective steps before theft can occur. The following 4 steps provide an outline to help you get started:
It’s also important to make sure your company regularly backs up all data in a way that keeps it safe and secure. SoftwareOne’s BackupSimple covers the main pillars of modern data protection, protecting your hybrid cloud workloads, SaaS apps, and endpoints alike
As you move forward, stay vigilant. Ensure your data is protected, stay aware of the latest scams, and continue to train your employees. With the proper strategies and support in place, you’ll never fall victim to identity theft.
SoftwareOne Digital Workplace Security Services add security without contributing to your staffing overhead. We operate a dedicated security operations center (SOC) that tracks data vulnerabilities globally to prevent losses due to break-ins or employee errors.
SoftwareOne Digital Workplace Security Services add security without contributing to your staffing overhead. We operate a dedicated security operations center (SOC) that tracks data vulnerabilities globally to prevent losses due to break-ins or employee errors.
