The problem of identity theft is slowly making progress in the sphere of awareness for the general public, but business identity theft is a less known and understood crime. Business identity theft is a crime where an identity thief will use a business' identity to empty corporate bank accounts, take out new lines of credit, make fraudulent purchases, or even apply for tax credits or refunds.
Business identity theft, also known as corporate identity theft, will typically involve a criminal fraudulently modifying a business' records that are filed with a state's government organization responsible for maintaining business records, often the state's Secretary of State. The majority of states do not have any authentication procedures requiring anyone sending in documents on behalf of a business to prove that they are the owners of the business. thief will use a business' identity to empty corporate bank accounts, take out new lines of credit, make fraudulent purchases, or even apply for tax credits or refunds.
Criminals will use this lax business records system to change the business' address, the business' registered agent, and its corporate officers. Dormant businesses are particularly vulnerable to identity theft as they are still valid business organizations, but the owners have stopped operating the business and assume that it will stay inactive.
This allows the identity thieves to fraudulently use the business' identity for a longer period of time before anyone becomes aware of the crime. Criminals will target these dormant businesses and effectively bring them back to life by filing the appropriate documents with the state, then use the business' identity to pile up debt and steal as much money as possible before packing up and moving on to the next unsuspecting business.
While there is no surefire way to prevent corporate identity theft, following the recommendations listed below provided by the National Association of Secretaries of State (NASS) will help minimize the risk of your business' identity being stolen:
- File all business reports and renewals with your state filing offices on time and be aware of who has access to this information within your company
- Sign up for email notification of any business record changes if available in your state
- Periodically check your business records, even if your business is dissolved or inactive
- Sign up for email notifications from banks and other creditors, if available
- Monitor business accounts, bills, credit card statements, etcetera, and reconcile your statements on a regular basis
- Monitor credit reports and sign up for a credit monitoring service
- Safeguard your company's sensitive information, including account numbers and passwords, being sure to shred any trash that contains this information
- Ensure that your computers are secure, and train employees to avoid phishing scams and emails that may contain malicious viruses
If you found this information helpful, you may want to consider taking part in the Identity Theft Resource Center's Anyone3 fundraising campaign. For more information or to donate please visit http://www.idtheftcenter.org/anyone-3.