Business Tips

How to limit the risk of identity theft for yourself and your business

By July 27, 2018October 17th, 2018No Comments

The risk of personal identity theft is a fact of life for everyone, and business owners are no exception. However, criminals have a lot more potential targets for fraud when someone owns a business.

“Business identity theft is like regular identity theft — they get as much cash upfront as they can under the business’s name and then disappear. It’s hard to catch these criminals, that’s the unfortunate part,” says Jamie Kibler, chief compliance officer at Richwood Bank.

Smart Business spoke with Kibler about how business owners might be targeted with identity theft and what they can do about it.

In what ways could a business owner be at risk with regard to identity theft?

While individual identity theft is the most common, a business can be targeted, too. Criminals might steal details about the business and/or business owner to open a loan or account in that business’s name with no intention of paying on the debt. They could use stolen information to set up a fake company to obtain credit in the existing company’s name. Then the criminals can buy retail or sell stolen property, leaving the legitimate business owner liable for their activities and perhaps stuck with business expenses or tax obligations. This in turn could make it difficult to make payroll and pay the bills to keep the legitimate business running, especially if those loans have personal guarantees.

All the thieves need is photo identification, a Social Security number, date of birth, a legal business name and a physical address. In most states, it only costs a few hundred dollars to create a new business, and the criminals could have the articles of incorporation and an employer identification number in less than a month. The new beneficial ownership rule adds another layer of security by requiring banks to collect information on more than one person, but it won’t deter determined criminals.

Another trend is schemes that focus on electronic wire transfers. People hack emails or use social engineering, which is when criminals trick their victims into providing the information, to gain the necessary material. Then, an employee at a company who usually wires $5,000 to a vendor every month might get an email that looks like it always does, but uses a different email address. So, the employee processes the $5,000 transfer. Then the bank gets another email asking to wire $50,000. While the second request might throw up a red flag because it’s out of the ordinary, the $5,000 is already gone.

How can business owners mitigate their risk for these types of fraud?

Make sure you’re reviewing any statements that may come through the mail. Monitor your business accounts daily. Online and mobile banking can let you see in real time what’s happening in your bank accounts. The bank can set up authentication controls to help make sure that fraudulent wire transfers aren’t being sent from your account. It can also help you set up alerts so if a debit card is swiped or a check is paid, you get a text, email or phone call.

Educate your employees about the risks. They need to read all emails carefully, pay attention to the details and make sure whatever they’re clicking on is legitimate. They also need to be careful when replying to emails because some criminals are now spoofing email addresses, so it still looks like it’s going to the right email address.

Emails that tell you to change your password are a concern. They may be trying to get your password — instead of changing your password within the email platform, you’re taken to another stream. Then, they can go through your emails, while locking you out of the account. If you get a message from someone who claims to be from your bank, asking you to verify your account number through a text message, email or by clicking on a link, it’s probably not legitimate. Banks are more likely to tell you to call them. If you’re unsure, look up your bank’s number and ask them. (Don’t call the number in the email.)

While you should check your credit scores regularly, you can also can get services that actively monitor your Social Security number and credit scores. Then you’ll know if a bank has looked at your credit report because a criminal is applying for a loan in your name. It’s really a matter of staying vigilant and seeing the whole picture.


Jamie Kibler, Chief Compliance Officer

Interviewed and written by: Jayne Gest
Published with permission by Smart Business