5 Reasons Why Businesses Should Care About Identity Theft

Identity theft is a major problem, and it's an issue that can have a major impact on your company. Often, identity theft goes undetected for years, which can lead to serious consequences.

The stolen business identity is used to apply for loans, open credit card accounts, or claim tax refunds. These fake accounts will cause your credit score to drop and increase the risk of bankruptcy. In the meantime, the thief may be doing business under your name without you knowing it. In this article, we’ll share five reasons that businesses should care about identity theft.

What are the risks for businesses?

The main risk businesses face is the loss of a company’s reputation, which is likely to take a long time to bounce back from. Not only the loss of reputation, but these are the five biggest concerns for businesses when it comes to identity theft:

  • Late payrolls and loss of employees
  • State and federal tax disputes
  • Negligence liability
  • Lines of credit opened in your business account
  • Bankruptcy

Businesses should have a stronger interest than individuals when it comes to preventing identity theft. IdentityGuard has a helpful article with some examples of identity fraud to help you.

What should businesses do to protect themselves?

To make the most out of ID protection for your business, you should be doing more than just protecting your employees’ passwords or shutting down existing customer databases. While security systems exist for businesses, it’s important to realize that they only work if you properly manage how and who can access them.

This means ensuring that your HR team has access to the information they need. And if you have employees or clients who require access to some sensitive information, you should make sure to turn on key-authentication. Here are the 10 commandments of cybersecurity that your organization should be following.

It’s also best to follow a least-privilege necessary policy, which means that employees should have access to information, data, and file structures only absolutely necessary for them to perform their roles.

Why is business identity theft so hard?

Before we can discuss some of the effects that business identity theft has on individuals, we need to discuss why it’s so difficult to pull off for any amount of time.

In many ways, the answer lies in the sheer scale of data businesses collect. Businesses can’t differentiate among their own staff members; all of the data is lumped together, making it very easy for criminals to take advantage of. It can even be possible for criminals to impersonate employees, potentially accessing other internal systems and stealing data that’s not connected to their job description.

The smaller the business, the easier it is to make fraudulent transactions. With less overhead, it’s easier for criminals to carry out illegal activities. Long-term business identity theft requires that the criminals identify victims (a highly risky proposition), wait until those victims are financially solvent, and then go out and execute their scheme.

By analyzing your personal and business credit records, banks and credit agencies will be able to determine whether or not you’ve been a victim of identity theft.

How does business ID theft happen?

Organizations can suffer from what’s known as a “social engineering” attack. In this type of fraud, someone attacks a company’s identity system and tricks a business employee or someone from the company’s support team into revealing personal information, often with the expectation of obtaining goods or services.

To perform this type of attack, criminals typically send out spam emails designed to gain access to the identity system of a business. Once inside, the criminals find employees to impersonate. They create fake phishing or fake virus emails or malware-laden attachments that trick employees into revealing personal information. The criminals then use that data to open new accounts, take out loans, file fraudulent tax returns or apply for credit cards and other items.

Conclusion

The kind of security that you have on the inside of your business is the same kind of security you’d have on the outside of your business. I don’t think that you’ll be taken advantage of the same way if you invest in the same kinds of security measures that you would a house, and it might just give you a big edge over your competition.

There are plenty of good reasons for you to develop a corporate identity management program. When you manage a company’s identity, you get to protect your customers, employees, and your business reputation.

August 25, 2021
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