Identity theft is not the only threat to individuals; businesses also face such risks because of fraudulent practices. Business identity theft occurs when owners, directors, or any entity behind that are criminal minds. The criminals establish bank accounts in businesses’ names to hide illegal transactions. In the business world, the unauthorized use of a corporation name for financial gains is a challenging risk. This big-scale identity theft is a more severe and complicated threat to commit fraud.
What is Business Identity Theft?
Business identity theft occurs when fraudsters access bank accounts and credit cards to conceal illegal transactions. The illegal entity behind the business steals the sensitive information of the company, such as the tax identification number (TIN), to get profits. A criminal entity sometimes takes out loans using the identity and credibility of a legitimate business. These unnoticed tractions victimize business partners’ finances and destroy reputations.
Additionally, misusing trademarks, copyrights, patents, or other property for personal gain may result in business identity theft and legal action. A business has to maintain strict policies regarding sensitive data and documents to prevent identity theft. If these thieves are not identified on time, the company will face fraud and harm to the reputation in the market.
Forms of Business commercial identity theft
Business identity theft is challenging for companies of every type, size, and scale. However, small business identity theft is more dangerous for small businesses as it will take longer to recover from fraudulent activities. And small companies sometimes detect this problem too late. Today, advanced ways of stealing corporate identity are introduced in the digital world as information is available on the computer. Some forms of business identity theft are as follows:
- Fraudulent filings may target the business, such as opening credit, loans, or credit cards in the business’s name.
- A thief may also create a fake website in the name of the original business. The purpose is to steal business partners’ data as more traffic leads to that page.
- Thieves use a registered business name or logo for their fake trademark recognition. They can also use the mailing address of the existing business.
- Suspicious entities use federal employer identification numbers to exempt from tax in the documents. A thief may use this sensitive information for tax subsidies and obtaining refunds from the government.
- The fraudulent LLC address is used for illegal payments and mailings. As a result, genuine businesses face financial loss and security threats.
Identity Theft Protection for Business
In the US, companies face billions of dollars in yearly losses due to business identity theft. The consequences of this type of theft include loss of cash flow, late payments, fines, and difficulty in meeting tax obligations. In addition to income loss, other associated consequences of identity theft include lateness and the inability to pay employees and vendors. The business’ bottom line and reputation are negatively impacted.
Here are the steps to help companies avoid falling victim to business identity theft:
- Corporations must ensure that they check and monitor the commercial credit report for the business.
- Upon receiving bills and account statements, review them and promptly report any suspicious activity to the relevant company.
- Make sure to sign up for electronic notifications with your bank and other creditors or service providers.
- Keep business records and documents secure. Protect EIN (employer identification number), account numbers, and personal information.
Secure Business Identity
Business identity, including the name, address, employer identification number (EIN), tax reference number, and other sensitive documents. The criminals, politically exposed persons (PEPs), and sanctioned people steal sensitive information to set up new lines of credit, bank accounts, and loans. All businesses must take proactive steps to fight against the challenge of corporate identity theft. Otherwise, a company may face significant loss of money and reputation. While onboarding the companies, a corporation must ask for the relevant documentation to partner only with a reliable business identity. Fake businesses can damage the data and privacy of partner companies. It helps to detect potential risks associated with the identification of business and establish secure financial relations.
