Businesses Can Also Be Victims of Identity Theft and Fraud

While the threat of personal identity theft gets a lot of attention, identity thieves pursue even bigger payoffs by preying on businesses, too. With the recent news of local law firms becoming victims of e-mail scams, Hawaii’s BBB offers tips to avoid business ID theft online and advice for small business owners whose identity has been compromised.

Common Types of Business ID Theft and Fraud
Regardless of the target or tactic, scams related to business identity theft or fraud have only one goal: To deceive. Common types of identify fraud and theft include:

• Overpayment scams. Posing as a prospective client is a common identity fraud scheme against businesses. First, the scammer contacts a business by e-mail to present themselves as a prospective client. Soon after, the “client” sends or offers to pay an amount much greater than the actual cost of a product or service, and asks to have the extra money returned or forwarded to another vendor—usually by wire transfer. Businesses that deposit the checks, money orders or credit card charges ultimately find out they are counterfeit and left liable for the losses. 
• Falsely using a business’s name. Business ID thieves often hijack a trustworthy name and reputation to commit consumer fraud, such as advance fee loan or lottery scams. Business owners usually learn about the identity theft after receiving calls from angry consumers ripped off by the scammers.
• Fraudulent use of Employer Identification Numbers. A crafty ID thief can do a lot of damage with a business’s Employer Identification Number or individual’s Social Security Number, including gaining access to or opening up new bank and credit card accounts under their name.
• Purchasing goods under a company’s name. Business identity theft can also be perpetrated by scammers who purchase items in the company’s name either for personal use or to resell.

Avoiding Scams and Business ID Theft Online
When it comes to protecting your identity, an ounce of prevention is worth far more than the amount of money, energy, and agony that goes into getting things back to normal after your—or your clients’—financial and personal information has been stolen.

• Don’t get hooked by phishing. Phishing uses e-mail in order to coerce sensitive information from victims and may be disguised as messages from potential clients to gain trust, sympathy or details used to set up a scam.
• Reduce the chance of ID theft through phishing e-mails by not posting your full e-mail address online. Turn your name or the words “E-mail me” into a clickable e-mail link or direct people to your Web site instead.
• Always delete unsolicited e-mails from banks, credit unions, investment firms and government agencies with which you do not have an established relationship.
• Use anti-virus, anti-spyware, anti-spam, and firewall protection. Most computers come with pre-installed firewall protection, so make sure this protection is enabled. Once installed, be sure to keep the security software updated and schedule regular system scans.

Responding to Business ID Theft and Fraud
The most important thing to do when you discover identity fraud is to take action right away.

• Notify online authorities. Contact your ISP or web-based e-mail provider to report spam, phishing attempts or a spoofed e-mail address. If scammers are using your business name on phishing e-mails or phony Web sites, also contact the FBI's Internet Crime Complaint Center.
• Report it to the bank, credit card companies and police. Immediately notify the financial institutions if your ID is lost or stolen. If someone is accessing accounts, forging checks or opening up new lines of credit, file a report with the local police and get a copy of the report to include when notifying your creditors and credit reporting agencies of the fraudulent activity.
• Alert the public. If your identity is being used to rip off customers, warning the public is a can prevent additional victims. An easy first step is to post a warning on your Web site home page briefly. Contact Hawaii’s BBB for help in getting information out to consumers quickly. Depending on the scope of the scam, business owners might also want to consider alerting media or making direct contact with customers via phone or e-mail. 
• Review your credit report. If you are an independent agent, contractor or in a sole proprietorship, the same consumer protections apply as if an individual’s ID were stolen—such as access to free credit reports and the ability to place a fraud alert on the report. For most businesses however, those credit reports don’t typically include the information necessary for detecting fraud.

For more small business advice on avoiding ID theft and what to do if it happens to you, go to www.bbb.org.