Must-know facts about emerging business identity theft?
We are familiar with identity theft but unaware of the fact that identity theft is not limited to individuals, instead, it also impersonates business identities. Identity theft is no longer a consumer crime only. With the evolution of digital businesses, cybercriminals have learned that businesses can be a very easy and potential target as they can also have their identities get stolen.
Business identity theft is also known as commercial identity theft. It involves the illegal impersonation of any business or business’s employee for criminal (financial or non-financial) gain. Unlike consumer fraud, business identity theft is a large-scale fraud that can impact a business and employees equally.
Small organizations often don’t pay special heed to their security practices and blindly trust their employees. Business identity theft isn’t restricted to large-scale organizations only. Any business having a market-presence can become a victim of identity theft regardless of the company size or income.
What business identity theft is not?
Most people confuse business identity theft with consumer fraud and fail to understand what actually business identity theft is. This continuous mischaracterization of business identity theft in different articles and media sources can be dangerous for business. The reason is such misconceptions keep the business owners oblivious of the true nature of the crimes. Also, the business remains unprepared to specifically deal with this type of identity theft crimes.
It is essential for businesses to know what is business identity theft and what is not.
1. Business identity theft is not a consumer threat — it doesn’t include stealing of consumer’s personal or financial information.
2. Business Identity theft is not an information security breach — it means it doesn’t include loss of consumer or confidential data; it is actually impersonation of business itself.
3. Business identity theft is not an employee theft — means it doesn’t include exploitation of the company’s assets i.e. the employees (current or past) of the business.
4. Business identity theft is not a corporate theft — corporates are not the only entities targeted in this crime. Instead, it covers all the business sectors regardless of their size, e.g. NGOs, schools, trusts, LLCs, municipalities, and county governments, etc.
Reasons why businesses are targeted by fraudsters?
Business identity theft occurs for the very same reason as consumer identity theft, i.e. to gain financial advantages. Businesses operate on a much larger scale than any individual which makes businesses the main target of the cybercriminal and fraudsters. The purpose that thieves target business is a lot more than a lucrative pursuit.
To clearly understand the reasons that identity thieves are targeting businesses, it is essential to first compare the potential gains of consumer identity theft to business identity theft and too from the criminals’ perspective.
Easy credit card and account opening
Opening a business account is relatively easier than a consumer account. A consumer mostly have to get approved their credit check, let’s say with a $500 limit, but in the case of a business account, an individual can automatically be granted permission for opening an account without any particular credit check. This grabs the attention of the thieves as most banks are eager to open an account for businesses because they are ready to spend more.
Larger business accounts balance
Businesses are known to maintain a larger account balance than consumers. An individual consumer’s account may have a balance of $500- $2000 on average as compared to $5000 — $10,000 in a small business account. In the case of a larger business, the balance may reach hundreds or even thousands of dollars. Now looking at these accounts from the perspective of criminals, it is not difficult to realize which one is a lucrative target for them.
Higher credit limits
As discussed, businesses spend more than consumer so this gives the established business a privilege of having higher credit limits; whereas consumers are limited to particular credit. In addition, businesses often link their employees’ cards to the main business account to make the whole process frictionless. But this is where the employee cards can be compromised. As without any expense approval process, review and reconciliation, and transaction limit, criminals can easily make fraudulent transactions without being detected timely.
Small scale businesses are on the top of the target list of criminals because they typically don’t have proper security layers, oversights, identity verification solutions, and even and IT department. In addition, most businesses are oblivious to the security threats and risks that can harm their business; business identity theft is one of them. Being at the initial development stage, it is difficult for small businesses to keep up with day to day demands of tracking and monitoring account transactions and security updates. This leaves the room for the thieves to strike.
Easy to access information
Today’s hyper-digital world has caused trouble for individuals as well as businesses in terms of transparency. The business information is readily available to anyone having a computer and internet. Internet thieves do not need to work hard to dig in information about any business and steal the business’s identity. Also, in most of the states, businesses are required to post their business documents containing information regarding sales tax number, registration number, business license number, etc. Such documents leave ample opportunity for criminals to steal information.
Protect your information — keep a low profile
In the digital world, though the information is readily available on the internet, still it’s worth mentioning that it protects your information by keeping a low profile in the digital sphere. Be careful about what you share in public and online. Just one little mistake can put the company at risk.
In addition, don’t allow access to confidential information to everyone in the company. Even if your employees are trustworthy they can still serve as a broker between company data and criminals; e.g. the criminals can use their identity and credentials to access the information without an employee’s knowledge. Spend time on employee training and provide them proper guidelines regarding identity theft schemes.
Also, whenever someone from the authorized employee tries to access information, carefully check the credentials first. However, credentials like id and password can be hacked or stolen, so it’s better to use biometric verification systems. The use of AI-based verification services enables the organizations to verify the employees in real-time and hinder the unauthorized person to access the information.
Invest in security
Whether a large business or not, always invest in your security. It’s a common proverb “prevention is better than cure.” The same thing goes for businesses as well. Business identity theft can cause a significant loss for the business financially as well as its reputation. When it comes to the distribution of business information, the business owners better know what to expose and what not to. But sometimes, technology and security gaps can go beyond human control.
To undermine such gaps, businesses need to invest in their cybersecurity that can protect the business against information breach and identity theft. In December 2018, CNBC highlighted the impact of identity theft on business as it puts the business’ brand, reputation, and trade secrets at stake. According to the FBI, one case of business identity theft cost the organization $1 billion in market share and hundreds of jobs.
Business Identity theft can happen to every business and industry regardless of its size, but small businesses are at major risk. It is essential for business owners to be aware of the possible implications as a minor security gap can prove to be hazardous, leading to the above-mentioned consequences.
It is not possible to always prevent this type of crime. However, by having a clear idea about business identity theft and how and why it exploits business identities for illegal use can help businesses to stay alert of the possible threat. In addition, businesses can identify the risks timely which eventually lessens the aftermath of the theft.