Most people associate identity theft with the theft of a specific victim’s credit card information or social security number. Identity theft, however, affects more than simply one person. Identity theft, which is sometimes referred to as corporate or business identity theft, is when thieves assume the identities of a company’s officials, workers, or owners in order to conduct illicit business and open credit accounts with banks and suppliers. It is the unlawful use of a person’s identity or company name for profit. There are many methods to conduct this fraud, and it is much more sophisticated than personal identity theft. Let’s discover how businesses can prevent this challenge.
A Brief Overview
Based on the name and trustworthiness of the company, the fraudsters establish credit lines or get business loans. Usually, when fraudsters take out a fast cash advance, they remain undetected until the victimized firm receives invoices and collection notifications, at which point they leave behind debt, ruined credit, and a tarnished reputation. Apart from the expenses linked to individual cases of business identity theft, several enterprises would also have to cope with legal consequences, such as protecting their patents, trademarks, copyrights, or other assets in court.
Businesses have to invest a lot of time and money to fix the damage to their finances, credit reports, and reputations if the plan is discovered. Since they don’t always have the security measures in place to identify and discourage fraudulent behavior, smaller firms are more vulnerable. It is possible that they won’t even be aware of it until it is too late.
How Do Fraudsters Conduct Business Identity Theft?
Any firm, regardless of size, is vulnerable to commercial identity theft. Criminals find it more profitable to target businesses since they often operate on a much greater scale than individuals, keeping larger bank account balances and credit limitations. Identity thieves no longer have to work as hard to gain sensitive and important information since everyone with a computer can quickly access personal and corporate information in today’s hyper-digital environment.
There are several types of company identity theft to be aware of, including:
- Monetary Fraud
Financial fraud is the act of taking over a company by submitting false paperwork. Here, fraudsters submit false universal commercial code (UCC) financial statements and create new credit lines, loans, or credit cards in the name of the company.
- Web Defacement
Web defacement is the act of using a phony website to impersonate a company. Here, cybercriminals alter a company’s website to divert visitors to a different one while obtaining client information.
- Trademark Ransom
Trademark ransom refers to the act of copying an established company by getting a comparable postal address. Here, criminals file a formal trademark application using a company’s name and then demand a ransom to be released from the trademark.
- Tax Fraud
Tax fraud involves submitting false returns utilizing tax subsidies and getting refunds from the federal or state governments while posing as a company and using a federal employment identification number.
The strategies could differ, but in each instance, the consequences might be disastrous for the company and its employees.
How Can Businesses Be Safeguarded?
Each year, business identity theft costs corporations billions of dollars. In addition to losing money, identity theft may result in late payments and penalties, cash flow problems, the inability to pay suppliers and workers, comply with tax requirements, or buy supplies. This will have a detrimental effect on the company’s reputation and credit score. To protect yourself and your employees from being victims of corporate identity theft, be proactive and adopt educational measures.
- Examine and keep an eye on the company’s commercial credit report.
- Register for online alerts from banks, other lenders, and other service providers.
- After receiving invoices and account statements, review them and notify the original firm right away if see any questionable behavior.
- Keep an eye on the company’s public record.
- Safeguard your account numbers, EIN (employment identification number), and other personal information, as well as your company’s records and paperwork.
- Teach employees the best practices for cybersecurity.
- Never divulge critical information over email or any other web-based platform.
- Purchase insurance for cybersecurity.
Briefly Stated
Cybercriminals are real and becoming more skilled every day. However, organizations must always have some defense against business identity protection theft. Enterprises can maintain their company’s good reputation and unwavering trust by safeguarding their technology, performing routine maintenance, abiding by the law, and investing in an excellent business verification solution. Therefore, remember that protecting the company’s core is just as important as managing data.
