Business identity theft: Fraud in the 21st century

By  Simon Renshaw, Director at AABRS

Just as identity theft is a real risk for private individuals, fraudsters have learnt that unsuspecting businesses have identities that can be stolen for their gain too, and in fact, some small businesses make very easy targets. Over the years, identity crimes have evolved. Once a crime committed by petty thieves, now it’s organised syndicates and professional fraudsters who steal business identities as a low risk and relatively simple way to make money.

In the media, we often hear instances of an information security breach, where confidential customer data is lost or stolen. That is not the same as business identity theft. Business identity theft occurs where a business is actually impersonated by a third-party. This could come in a range of forms. For example, a business’s website could be copied and other key identifiers misused, or business invoices, filings and records could be falsified. The aim of these actions is to defraud the business itself or its creditors, suppliers, financial institutions, owners and officers, or customers.

As well as negatively impacting the business’s cash-flow position, business identity theft can also cause serious problems with suppliers and creditors and damage a business’s reputation.

How can you protect your business?

The key to protecting your business against identity theft is to be prudent about guarding your information and monitoring your financial accounts regularly to make sure you’re aware exactly what’s going on. These are the steps you should take…

Regularly check your credit record

One of the clearest signs of attempted business identity theft is unusual activity on your credit record. Multiple loan applications you have not made are a sure sign that someone has your business’s details and is trying to defraud your business. However, any other unexpected changes to your business credit report or score, or changes to the business’s details, should be viewed with suspicion.

Create a secure online environment

Clear guidelines for online behaviour and the regular training of staff are essential to preventing the simple mistakes that can lead to business identity fraud. Employees should also be able to spot the warning signs of a breach so you can act quickly, hopefully before any damage has been done.

Check the information held at Companies House

Any unexpected changes to the details held at Companies House could be a sign of attempted fraud. These should be checked regularly to make sure they’re correct.  Fraudsters often target companies that are inactive, so make all your quarterly and annual filings on time and strike-off any dormant companies from the Companies House register.

Shred all corporate waste

Another important step is to shred any corporate waste. This is a job that should be done by the business owner or by an employee who has been thoroughly vetted. If you move premises, you should inform suppliers, creditors and customers immediately and redirect your post through Royal Mail. You should also keep bank statements, credit card statements and utility bills in a safe, secure and locked drawer.

Don’t be a victim! While following these steps and won’t eliminate the risks entirely, it will help to better protect your business from this destructive crime.