Business Identity Theft: How It Happensand What You Can Do About It
As an owner of one of the more than 30 million small businesses in the United States,1 you know how much it takes to run a successful enterprise. Securing customers, managing employees, paying vendors, and more. To say there’s a lot on your plate would short-change the commitment and effort it takes, especially in today’s economy. While focusing on those aspects are foundational and critical to your success, there’s one key area that busy business owners like you can miss—identity theft.
When most people think about identity theft, business identity theft is often not the first thing that comes to mind. Even though identity theft impacts millions of consumers every year, individuals are not the only group at risk. Businesses, especially small businesses, are largely affected, too.
Target Market: Why Business Identity Theft Is Attractive To Thieves
One way that business identity theft is different than consumer identity theft is that unlike consumer identity theft, there is little awareness about the subject amongst its victims. Since most companies are not aware of how business identity theft occurs, many are unprepared to respond to it. With the average small and midsize business data breach costing nearly $120,000,2 awareness is key to prevention and avoiding devastating financial consequences.
What else makes business identity theft so attractive to criminals? Here are three more things to consider:
1) Since many businesses handle large transactions often, identity thieves find it less challenging to steal large amounts without raising red flags.
2) Most identity theft laws and education focus on protecting consumers, not small businesses, leaving a knowledge gap on preventing and responding to business identity theft.
3) Gaining access to an individuals personally identifiable information, such as their Social Security number and date of birth, can prove more challenging to obtain. In contrast, company data, such as tax ID numbers and addresses, are accessible to the public, even identity thieves.
How Identity Theft Impacts Small Business Owners
Businesses run on efficient processes, people, and cash flow. When critical company resources are stolen, the impact on small businesses can be immediate and far-reaching. In the short term, identity theft can affect payroll and your employees. In the long run, your business’s credit file.
Mixing Business and Personal Information
A negative business credit file can damage your reputation, resulting in lost partnerships and opportunities. Since many companies run a business credit check before deciding to enter a business relationship, this can be a significant hurdle to the growth of a small business.
What’s more, small business owners tend to combine business and personal expenses on credit cards, so if company credit cards are mixed with business cards, the problem becomes two-fold if the personal cards are stolen and maxed out by an identity thief.
How Do Thieves Obtain Your Business Information to Commit Identity Theft?
The answer is summed up in two words: Data breaches. While it’s common for identity thieves to buy and sell consumer information obtained in a data breach to negatively impact their relationships with businesses, data breaches can also affect companies inside, through their employees.
Data Breaches and Employees
According to the Ponemon Institute, in 2018, 58% of small and mid-sized businesses experienced a breach, with 68% attributing it to employee negligence.3 Small business owners may be even surprised to know that to date, 500 million emails and login details have been exposed in data breaches. That information often ends up on the dark web, a significant marketplace for stolen information.4
Since employees often use the same passwords across multiple websites, including their company passwords, this common practice can provide criminals with easy access to small business networks.
Beyond employees, identity thieves can gain access to company information through their external relationships when data breaches occur. For example, if your company’s supplier is breached and the business has sensitive data on your company, it can be used to commit identity theft.
How Identity Thieves Use Your Businesses Information
Once a company is breached, identity thieves have countless options on how they can compromise small businesses. Among them are placing large orders with suppliers using company credit. Thieves can also:
Access your company bank accounts and siphon funds.
Damage your businesses’ reputation on your website, on social media, and more.
Hold company files for a hefty ransom.
Steal your customer data and create a breach.
What Can You Do To Prevent Business Identity Theft?
While no business can guarantee that identity theft won’t hit their business or bottom line, there are a handful of strategies that can be employed to reduce the risk.
1) Invest in reliable corporate security.
Consult with an IT security provider to build a cybersecurity plan for your business.
2) Add identity protection to your employee benefit plan.
Corporate security starts with taking care of your employee’s identity health. Helping protect your employee’s identities is a good return on your investment, potentially preventing their personal information from being used maliciously against your company.
3) Get small business identity protection.
Detection is the first step to prevention. With identity theft protection services, such as Business Dark Web Monitoring and Business Domain Monitoring, you can actively monitor your employees’ corporate email accounts to see if they’ve been exposed in a data breach. These services will also alert you if passwords are found and detect your business’s data on the dark web.
4) Have a data breach plan.
As the saying goes, a failure to plan is a plan to fail. No matter the size of your company, work with your team to ensure you have the resources and plan to respond.
How To Restore Your Businesses Identity
If your business is impacted by identity theft, working to get back to normal operations as quickly as possible is essential. When you choose a business identity plan, make sure it includes a restoration service. Most do. That way, if your business is compromised, you can get back on track with a dedicated expert to guide you throughout the process.
Small businesses make up nearly 100% of the companies in the United States,1 employing almost 60 million people. Having a plan to protect it yours will give you the peace of mind you need to focus on growing and delivering exceptional service.