There’s been plenty of news media stories about identity theft and the importance of protecting your credit. The majority of these stories are related to consumer identity theft and credit card fraud, but a new variety of crime has been steadily on the rise: business identity theft.
More and more business owners are finding themselves and their business the target of scammers and identity thieves, and the repercussions can take quite a toll as they attempt to repair the damage done.
What is Business Identity Theft?
Similar to consumer identity theft, business identity theft is when a thief uses a business’ identity for the purpose of fraudulently applying for credit. Once a thief is successful, they can use their newfound credit accounts to make large purchases, effectively ruining the business’ credit in the process.
A business owner that falls victim to identity theft will soon find themselves responsible for lots of bills, and will likely have to go through a long, lengthy and stressful process of attempting to convince credit card issuers that the purchases were the result of business identity theft.
Additionally, if collectors begin to come after the business owner for payments, it will show on the business’ credit report as well, making it much harder for the business to acquire credit in the future.
How To Prevent Business Identity Theft
Here are five smart ways to protect your small business from identity theft.
1. Regular Business Credit Monitoring
One of the best things you can do for your business, to prevent business identity theft, is to get order regular credit monitoring services. A monitoring service will help you keep a watchful eye on your business credit report, so if anything appears suspicious you’ll be able to handle it quickly before more damage is done.
2. Keep Business Documents Protected
Keeping all of your business documents safe and secure from those who shouldn’t have access to them is an important step in protecting your business credit. Business documents can contain a lot of important information that are susceptible to identity thieves.
Make sure all the documents you throw away with important and personal information are shredded, and don’t leave documents lying around the office either. To prevent business identity theft, sometimes you even need to be wary of your own employees. Keeping your username and passwords protected for online accounts and computer files also falls under this rule.
3. Use Prepaid Business Credit Cards
A prepaid business card for yourself or for your employees is another good way of protecting your credit. If a thief manages to steal a business credit card, or an employee loses one, there is a limit to how much the thief will be able to charge on it. Some prepaid business credit cards also enable you to deactivate them immediately if you are aware one has been lost or stolen.
4. Develop a Security Plan
Think about your current security, or lack thereof, and see how it can be improved. Think about all the potential ways an identity thief might gain access to business information they can use to open business credit accounts in your name; and develop a strategy to keep seal those potential breaches as best you can. You might also consult with a security expert who specializes in protecting your company’s credit.
5. Work With Reputable Vendors
When you work with vendors, it is likely you will often have to provide your federal tax ID number and credit card information. Do not supply this information to vendors you aren’t sure about, and only those that you have initiated contact. Be wary of solicitations from thieves masquerading as vendors, unrecognizable banks, or other companies that may ask you for your information.
None of these methods of protecting your credit is 100 percent foolproof, but they will certainly help to reduce the risks of becoming a victim of business identity theft. Additionally, regular credit monitoring of your business credit reports will enable you to keep an eye on things in case something does slip through the cracks.
Joy Mali is a staff writer at The Washington Times and Examiner. Her work is also featured on Lifehack, DailyFinance and other mainstream sites. She likes to share interesting tips to help people manage their personal finances and credit.
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