What is Business or Commercial Identity Theft?

Business or commercial identity theft happens when thieves use an existing business’ name to get credit, or they may bill a business’ clients for products and services. Sometimes the Social Security number of a company’s officer or another representative is required to commit business identity theft.

A big problem is that identifiers, such as federal IDs or employer identification numbers, are readily available in public records, dumpsters, or internally at banks and other creditors—which makes the ease of access to these numerical identifiers a catalyst for business identity theft. Business identity theft perpetrators are often former employees or current employees with direct access to the books and other forms of financial documentation. These schemers have ample opportunity to pad the books in favor of fraud.

Business identity theft victims don’t usually find out about the crime until big-time losses accumulate, or an audit occurs and someone discovers discrepancies on the books. Because of the hidden nature of the transactions, businesses can lose vast amounts of money. Business identity theft can remain undetected for years.

How can you protect yourself from business or commercial identity theft?

• Inside job: Business identity theft, or commercial identity theft, is an inside job. Employees often have access to documents that include owners’ and board members’ Social Security numbers, as well as the business’ tax ID number.
• Need-to-know basis: This information must only be accessed on a need-to-know basis by employees with proper credentialing. Even then, be suspect. It is imperative that this information stays secure.
• Checks and balances: Organizations should put a check-and-balance system into place, ensuring that for every employee who has access to company accounts, there are two employees—preferably upper management—who are assigned to make sure the books are balanced, that no money is missing, and that financial statements are double-checked for inaccuracies.
• Forensic accountants on retainer: In some instances, it is necessary to contract with forensic accountants or examiners to pay close attention to a business’ books and work to put monitoring systems in place.
• Identity theft protection: Identity theft protection can be a helpful tool to keep officers or owners informed of potential illicit activities, because a Social Security number is often required to open accounts under a business’ name.