As if the pandemic isn’t causing enough stress and anxiety for business owners, there’s another growing threat to worry about: business identity theft. KrebsOnSecurity, a leading security news source, recently warned of a “particularly aggressive business ID theft ring that’s spent years targeting small businesses across the country.” Even businesses that have slowed down operations due to the current climate are finding themselves targeted by this gang of thieves.
It’s not the first time alarms have been raised, either. A report by the National Cybersecurity Society (NCSS) identified four main types of business identity theft:
- Financial fraud: Obtaining new lines of credit, loans or credit cards; placing fraudulent UCC filings in the name of the business.
- Tax fraud: Filing fraudulent returns in the business name using tax subsidies or obtaining refunds from federal and state governments.
- Website defacement: Manipulation of a business’s identity on the web.
- Trademark ransom: Registering a business name with an official trademark and then demanding a ransom for its release.
While you can’t stop business identity theft completely, there are specific steps you can take to help reduce the chances it happens to your business (or at least spot it more quickly so you can act in order to prevent further damage).
StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here
Monitor your business credit
Increases in fraudulent lines of credit and other business accounts being opened in the name of a business are on the rise.
“For 2020, (Dun & Bradstreet) estimates an overall 258 percent spike in the crime,” according to the aforementioned KrebsOnSecurity report.
Here’s an example: When Miranda Marquit heard from relatives that they were getting calls from debt collectors trying to locate her, she knew something was wrong. As a financial writer, she pays her bills on time and stays on top of her credit. But monitoring her personal credit didn’t help here, because as it turns out, a crook had opened a credit card in the name of her business, and it didn’t appear on her consumer credit reports. Clearing it up took time away from her freelance writing business. She hadn’t been monitoring her business credit, and she says that was a mistake she came to regret, as she shared in a blog post about her saga.
It’s smart to check and monitor your business credit with the major business credit bureaus, including:
- Dun & Bradstreet
- Equifax
- Experian
As with personal credit, you want to keep an eye out for suspicious activity, including new accounts you don’t recognize or sudden drops in your credit scores. Inquiries aren’t as robust with business credit, but they can also be a tip-off that someone is trying to get access to your information. Keep in mind that unlike personal credit, anyone can check business credit if they are willing to pay for it.
There’s no AnnualCreditReport.com for business credit (or any law requiring free business credit reports).
Related: 5 Tips for Keeping Your Business Credit Strong During Turbulent Times
Watch out for Tax ID theft
As if crooks opening fraudulent accounts weren’t enough, the IRS is also reporting an increase in fraudulent business tax returns, including partnerships, estates and trusts.
In fact, the information gleaned from online sources and data breaches may be combined with other business data in order to secure large tax refunds in the name of your business. The NCSS report mentioned above shares that “In the state of Ohio, the business registry office found instances where criminals are selling business identity data as a ‘package.’”
The IRS has devoted a section of its website to business identity theft. Hopefully you’ll never need it, but if you do, you’ll find resources for understanding whether you have been a victim and what you can do about it.
Among the important tips listed are those that warn about crooks impersonating IRS representatives. The IRS states that it never:
- Initiates contact with taxpayers by email, text or social media to request personal or financial information
- Calls taxpayers with threats of lawsuits or arrests
- Calls, emails or texts to request taxpayer Identity Protection Pins
You can’t stop someone from filing a tax return for your business, but filing early can help: if a crook then tries to submit a tax return after you’ve already done so, it will likely be flagged. Always make sure your business address is up-to-date. That’s especially important now as some businesses are changing locations or working remotely. The IRS encourages you to help protect your Employer Identification Number (EIN) by “keeping the number safe and the application up-to-date with accurate responsible party and contact information.” File IRS Form 822-B for any changes and updates.
Sign Up: Receive the StartupNation newsletter!
Watch your online presence like a hawk
Scammers often take over an existing website or copy it, then use the legitimate businesses’ name to commit fraud of various types.
“Compromised websites go undetected for months,” warns the NCSS report. “Unpatched vulnerabilities in websites and limited web application firewall protections make websites vulnerable. Businesses don’t monitor the status of their websites to determine if they are still safe for users.”
Your website and social media profiles may be at risk. Even your good name could be stolen and used. Monitor your website and social media profiles on a regular basis. Check your website using a “private” or “incognito” browser. Investigate immediately if your website won’t load properly or redirects to another URL, or if you see content you don’t recognize.
As always, strong passwords are essential, as is making sure you always install the latest security patches.
Don’t let it happen to you
Surely you can’t imagine your business being targeted by identity theft, and you probably think it’s something to worry about only if and when it happens. But these threats are real, and they’re not going away.
Business identity theft is on the rise. Taking a few simple steps now may help your business become less of a target and, if it becomes one, help you fight back quickly.
