- What is Business Identity Theft?
- What Are Some Common Business Identity Theft Schemes?
- How Can You Prevent and Detect Business Identity Theft?
- What Should You Do If You Become A Victim of Business Identity Theft?
- Local, State, and National Efforts
- Other Resources
What is Business Identity Theft?
Business identity theft happens when criminals pose as owners, officers or employees of a business to illegally get cash, credit, and loans, leaving the victimized business with the debts. Identity thieves can steal a business’ identity by gaining access to the business’ bank accounts and credit cards or by stealing sensitive company information, such as the tax identification number (TIN) and the owners’ personal information. The thieves then open up lines of credit or get business loans based on the business’ identity and creditworthiness. Typically, thieves cash out quickly and go unnoticed until the bills and collection notices arrive at the door of the victimized business, leaving behind debts, damaged credit and a destroyed reputation.
Once the scheme is uncovered, businesses spend valuable time and resources to repair the harm to their finances, their credit profile, and their reputation.
What Are Some Common Business Identity Theft Schemes?
Examples of business identity theft include a variety of schemes involving the fraudulent use of company’s information, including:
- Establishing temporary office space and/or merchant accounts in a company’s name;
- Ordering merchandise or services with stolen credit card information or with bogus bank account details in the name of a victimized company;
- Scamming company employees or using phishing attacks to get to a company’s banking or credit information;
- Going through a business’ trash and recycling bins for account numbers and other sensitive data; and
- Filing bogus documents with the Secretary of State’s office in order to change the business’ registered address or the names of directors, officers or managers of the company, which can later help thieves establish lines of credit with banks and retailers.
How Can You Prevent and Detect Business Identity Theft?
Detection Starts with a Periodic Review of Business Records
Protect your sensitive company information as carefully as your sensitive personal informatin. California businesses are encouraged to conduct a periodic check of their business records to ensure no fraudulent or mistaken business entity filings have been made.
Prevention Requires Keeping Business Records Current
Keep your company records on file with the California Secretary of State accurate and up–to–date. As soon as any of your business contact information changes, update your business filings. At a minimum, check your business’ filings with the California Secretary of State’s office at least once a year.
Action to Take
To quickly view and print all the filings for a business, for free, go to the bizfile Online home page. Log-in access is not required. From the Business Entities Navigation box, click Free Business Search & Copies above the padlock and search by name or file number. Click the arrow in the blue box with the name of the business and click View History. Links to all documents filed will appear in the drop down menu.
You should immediately notify your local law enforcement authorities of any unauthorized changes and update your California Secretary of State business filings with the correct information. Be sure to get a certified copy of the fraudulent filing before updating your filings with the California Secretary of State's office. The certified copy of the wrong filing may be used as evidence in court.
Choose How Your Business Receives Notices from the California Secretary of State.
Businesses can choose the most secure method to receive notices from the California Secretary of State. After the initial Statement of Information is filed, the California Secretary of State sends reminders when subsequent statements are due and other notices directly to the business. These reminders are sent to the last mailing address of the business on record with the California Secretary of State. The business may elect to receive these notices by electronic mail when filing a Statement of Information. Businesses can also choose a designee to receive these notices.
Other preventative steps include:
- Monitoring your business' credit profile:
- Securing paper and electronic documents in locked cabinets and password protected files.
- Establishing company data security policies and limiting employee access to sensitive company and client information and assets.
- Not transmitting sensitive information, such as bank account information, via email or public websites.
- Shredding or destroying business records before putting them in the recycling bin.
- Using privacy screens with smart phones, personal information devices, notebooks, notepads, and laptops when accessing sensitive information while traveling.
- Not including sensitive personal or business information in public filings.
- Obtaining business insurance coverage that covers any potential business identity theft losses.
What Should You Do If You Become A Victim of Business Identity Theft?
If you believe your company has become a business identity theft victim, moving quickly could reduce the amount of damage your company suffers. The first things you should do are:
- Tell your bank, credit card providers, and other creditors that you may be a business identity theft victim and ask if they have received any recent or unusual charges or orders from someone claiming to be doing business in your name;
- Request copies of documents or emails that were used by the thieves to fraudulently open or access your accounts;
- Ask about placing fraud alerts on your business’ bank and merchant accounts;
- Report the issue to the small business credit reporting agencies of Dun & Bradstreet, Equifax, Experian, TransUnion;
- Notify local and/or state law enforcement officials;
- If the thieves made changes to business information on file with the Secretary of State, obtain certified copies of the fraudulent filings for later use and submit new filings with the correct information to the Secretary of State’s office.
- Talk to your business insurer and an attorney about your legal remedies.
Local, State, and National Efforts
Consider reaching out to your local chamber of commerce and suggesting a forum to educate your local small business community about the growing problem of business identity theft. To learn more about ongoing national efforts, visit the National Association of Secretaries of State (NASS) Business Identity Theft Task Force.
Here are some key state and federal agencies that may be able to help you as well if you find yourself in the unfortunate position of being a business identity theft victim:
- California Department of Justice (Identity Theft)
- California Department of Justice (Privacy Enforcement and Protection)
- Federal Trade Commission
- United States Department of Justice
- Federal Bureau of Investigation