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What Does Identity Theft Means For Business?

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Identity theft and fraud is a major issue for businesses. Identity theft can lead to lost productivity, damaged reputation, expensive legal fees, and even bankruptcy. In order to protect your business from identity theft, you need to fully understand how identity fraud works.

Here are some top tips for preventing fraud from hurting your business that you can start using today.

How identity theft hurts your business

Identity theft isn’t something that impacts only individuals, but businesses as well. In fact, a business identity can be stolen more easily than a person’s identity.

In the case of a stolen business identity, the criminals can easily build up their own account, impersonate themselves in a corporate system, and make themselves look like a legitimate business. You can read some examples of the damage done in these cases of identity theft.

This has the potential to damage the reputation of your company if the criminals can successfully build up their own business. The criminals also have a high chance of being able to take over clients, clients’ accounts, and carry out other malicious actions that will hurt your business.

They may also use your business tax ID for filing fraudulent tax returns, applying for small business loans, racking up credit under your name. This is harder to catch than individual identity theft, because a business often doesn’t catch erroneous expenditures until they see a big discrepancy in their credit report.

How can you protect your business from identity theft?

Here are some important ways for business owners to avoid identity theft from damaging their business.

1. Check up on your company’s credit

A business’ credit score is a key indicator of their credibility and trustworthiness. Since business identities are often stolen, the criminals will always be looking at your company’s credit score. A bad credit score can damage your company’s reputation and might even make you liable for any fraudulent transactions.

Whenever you get a new credit card, bank loan, or government contract, a business identity is at risk of getting stolen, because these sorts of records are in the public domain, compared to private individuals.. To protect your business, you can get a copy of your business’ credit report so that you can check whether a business identity has already been stolen.

2. Set up strong fraud policies

Each company is different. Some are more exposed to fraud, because they’re more business-oriented. Some companies might want to strengthen their fraud policies to prevent more potential frauds.

However, it’s always a good idea to maintain a solid policy on fraud, because it might save a business from the damages of fraud.

3. Educate employees about fraud

Employees are also very important in preventing identity theft. If you don’t tell your employees about fraud, they might do something out of malice to defraud their customers. Educating employees can help the business prevent future frauds, so it’s a good idea to discuss the issue of fraud with them before a financial fraud happens.

4. Use a secure filing system and shred documents

Many stolen identities are often sold to identity fraud syndicates. If your company employees get access to your files, you might be at risk of identity theft if those documents get reused by the syndicate.

If your business keeps documents on file in a secure location, you’ll never have to worry about someone else accessing your files and stealing your business identities.

5. Invest in cybersecurity

When you invest in cybersecurity, you’ll protect your business from the damages that identity theft can cause. It’s advisable to invest in a good security solution and the best defense against identity theft. If your business uses a cloud platform to store documents, for example, you can protect your documents using cloud encryption.

Conclusion

Business identities can be stolen at any time. If your business identity is stolen, your customers might be angry with you, and you might also be in danger of facing financial losses. All businesses need to have a secure and strong identity theft prevention policy in place, so that their customers and employees can rest easy.

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