A majority of the media attention has focused on the sharp increase of personal identity theft or on the loss of customer data by businesses. Very little focus has been given to the damage done by fraudsters who craftily steal the identity of a business. The difference between personal and business identity theft is quite simple. The victim of the fraudulent act is a company instead of an individual. However, the damage to a business can be just as, if not more, devastating.
Unfortunately, the consequences of a stolen business identity can affect not only the proprietor, but also suppliers, clients and even employees. The consequences may include fraudulent high dollar value purchases, illegitimate business agreements, fraudulent loans and damage to business credit ratings. As one 2009 study found, 88 percent of US companies that experienced fraud reported a decline in financial performance.
Recovering from these fraudulent acts can be quite difficult and expensive. However, the best defense against the damages of business identity theft is to prevent it from happening. There are many basic things a company can do to reduce the risk of becoming a victim. For example, shred all business documents and purchase computer security software to protect electronic information. Additionally, establish processes to detect and deter fraud from happening. Develop written procedures to define how certain accounting procedures are handled. Or establish an anonymous way for employees to report suspected fraud.
Please evaluate what your business is doing to prevent fraud. Even the simplest changes can prevent your business from becoming a victim.