Monitoring your business credit report is like having airbags in your vehicle - it won't prevent your business identity's data from ever being stolen, but it could help you mitigate the financial and reputational damage (your injury as the victim) that is associated with business identity theft.
Business identity theft occurs in many ways, from 'knock-off' products masquerading as a recognized brand to fraudulently obtaining credit by using the name, reputation and identifying information of a reputable company. Data breaches and hacking are among the chief ways criminals obtain the information they need to steal a business' identity - and the crime continues to grow in scope.
By early August of this year, 360 data breaches at organizations ranging from private and public companies, government agencies and medical offices had exposed more than 7.5 million records, according to the Identity Theft Resource Center. Small businesses are especially at risk, studies show. In 2012, half of all targeted cyberattacks aimed at businesses with fewer than 2,500 employees, and 31 percent targeted companies with 250 employees or fewer, according to Symantec's Internet Security Threat Report. Additionally, Javelin Strategy & Research reports that small businesses are 15 times more likely than consumers to be victims of fraud.
Many security experts believe it's impossible to entirely avoid a data breach or other forms of cyberattack. While consumers whose identities are compromised or stolen are protected by multiple laws aimed at helping them recover, protections for businesses are not as strong. It's important for businesses to take steps to reduce their risk of identity theft and improve their ability to recover from it when it does occur.
BusinessIDTheft.org, an informational website maintained by the Identity Theft Protection Association, offers advice for protecting your company from business identity theft and its damages, including:
* Protect your federal Employer Identification Number (EIN) as vigilantly as you do your own Social Security number. Criminals can use your EIN to commit identity theft, tax fraud and other schemes.
* Keep documents with identifying information securely stored away from access by unauthorized people. Shred and securely dispose of documents you no longer need.
* If the secretary of state in your state offers email alerts when your business information has been changed or updated, sign up for those alerts. The notifications may provide early indication of fraud.
* Regularly review your business credit report with the major credit bureaus that provide business credit services. Products like Experian's Business Credit Advantage allow you to view your business credit report whenever you want. Monitoring your business credit report can help you discover errors that might negatively affect cash flow, verify the completeness and accuracy of your credit file, stay on top of credit changes that could negatively affect your business, and know who is inquiring about your business. Plus Experian's product provides email alerts on key changes reported to the credit bureau that can help you detect fraud sooner and reduce the damages caused by business identity theft.
In 2010, fraud cost small businesses about $8 billion, according to Javelin. While the actual amount stolen per instance of small business identity theft was, on average, only slightly higher than what consumers lose, cleanup costs were 150 percent higher for businesses than for consumers, Javelin says.
To learn more about business identity theft and how to prevent it, visit www.BusinessIDtheft.org or www.idtheftcenter.org/index.php, the website of the Identity Theft Resource Center. To learn more about Business Credit Advantage and how it can help your business detect fraud sooner, visit www.experian.com/businesscreditadvantage or www.smartbusinessreports.com.