How to Prevent Business Identity Theft

You’ve probably heard of identity theft, a process involving someone fraudulently using another person’s credit information or social security number for financial gain. The U.S. Department of Justice has reported that identity theft has even become the #1 for profit crime in the United States. Believe it or not, these types of crimes are not limited to just consumers, they have spread quietly prevalently over the business world in the last few years. Business identity theft involves posing as a legitimate business in order to get access to credit lines or steal customer information. Let’s see why businesses have recently grown as a prime target for identity thieves.

One of the reasons businesses are being targeted is that is much easier to open a business account on credit than it is to open a consumer account. A consumer would have to be credit checked to open even an account with a $500 credit limit, whereas a business can be approved an account double in value on with no credit check. Accounts provided to businesses also have several times the credit limit available than to the average consumer.

Simply put, businesses tend to have larger bank balances than a regular consumer. Even a small business can have tens or hundreds of thousands more than a consumer checking account. It is not hard to see why these larger accounts have become a high value target amongst identity thieves.

Not only is it easier for a business to obtain a credit account over the average consumer, they also enjoy extended payment terms. Businesses typically provide other business terms of 30-120 days, much longer than they do on a consumer account. This provide identity thieves ample time to receive products or services in a business name, while avoiding the risk of early detection that comes with using a fraudulent form of payment.

Small businesses have become especially vulnerable to identity theft due to their lack of security. Small businesses simply do not have the vast accounting or IT departments that larger businesses utilize to stop these fraudsters. Not to mention the lack of awareness, small businesses simply do not have the necessary precautions to prevent this type of activity.

Businesses are also a prime target for identity theft due to the amount of necessary information being already publicly available. By law, most businesses are required to publicize information such as address, tax ids, business license numbers, etc. Anyone can order a copy of a business credit report which contains a majority of the information needed for identity theft. Business registrations containing lists of officers, directors as well as their signatures are even available with state public record.