Identity theft is a hot topic and a big concern for many people these days. It seems like we regularly hear about personal data being stolen from one company or another. Have you ever considered the likelihood that your business might be vulnerable to the same type of identity theft?
A business’ credit profile is a precious asset that can be used to acquire financing for growth, help a seasonal business overcome a cash flow bump, or otherwise acquire capital to help a business grow and thrive. Protecting that asset from identity theft is an important part of building, and maintaining, a strong business credit profile.
Why Identity Thieves Love Small Businesses
In a recent article for Credit.com, Garrett Sutton, gives a great example of the potential risks and why we should be ever vigilant:
“Not long ago, a small business owner I work with found herself the target of an identity thief. He didn’t open credit lines in the name of the business, but instead stole its name and good reputation to bilk other entrepreneurs out of thousands of dollars. He was quite blatant about it, even representing himself on LinkedIn as a principal of the business.”
Garrett gives three reasons why your small business might be a target for such identity theft:
1. It’s easy to get important information about your company: Unlike the protections in place to help shield your personal data, it’s much easier to access some pretty important information about you business—most of it is part of the public record and can be accessed without breaking any laws.
2. Stealing your company’s identity can be very profitable: Business credit limits and business bank accounts are often larger than personal accounts, making them attractive targets for identity thieves. “…[A] large wire transfer overseas doesn’t set off alarm bells the way it might on an individual’s account,” writes Garrett.
3. It’s easier to slip by undetected: Many small business owners are unaware that there are credit-reporting bureaus that focus on business credit. What’s more, because some vendors don’t report credit history to the bureaus, it’s possible that an identity thief can be using your business’ reputation for months before you catch on. “I learned of one business that was a victim, and the imposters rented office space in the same building where the actual business was located to pull of their scheme!” added Garrett.
What Can You Do About It?
The best way to protect your business’ identity is to start by creating relationships with the business credit reporting bureaus (Experian, Dunn & Bradstreet, and Equifax)—and regularly review your credit profile. Make sure you can account for every enquiry and every account. And don’t stop there. Make sure all the contact information they list for your business is accurate and doesn’t include someone it shouldn’t (even if they are an employee) or an incorrect address. You should also make sure all your credit accounts know who at your company is authorized to make purchases and anyone outside of that list will require pre-authorization.
It also makes sense to take steps to ensure that computer passwords for sensitive information is not openly available to everyone in the office and is restricted to only those that need it. Additionally, taking security precautions like keeping filing cabinets where account information is kept locked when not in use is a good idea.
Taking some of these precautions might sound like overkill, especially in an environment where everyone knows and trusts each other. Nevertheless, my grandfather used to argue that locks were for honest people. In other words, erring on the side of caution and taking a proactive approach to fighting identity theft helps keep everyone honest.