Why Entrepreneurs Need to Talk About Identity Theft More

Entrepreneurs and small business owners face a lack of significant representation in mainstream media, where identity theft is concerned. This creates somewhat of a sociological issue.

Most of the big data theft attacks you read about are centered on corporations, and public sentiment towards corporations can be apathetic or even hostile.

Stories of companies like Facebook or Amazon being hacked are often applauded in social media, seen as an egg on the face of soulless corporations.

But as much as these stories drive media narrative, the truth is that business identity theft affects some of the most struggling among us, small business owners from lower-middle classes.

Most average people are aware of personal identity theft, but the myriad of ways small business owners can be attacked is not often spoken about. Let’s address those a bit.

Committing business identity theft is easier for criminals

Individual consumer information is mostly private, as consumers are afforded a lot of protections in privacy laws.

Businesses however are required to make a lot of information public, which includes sensitive information such as financial statements, EINs (employee identification numbers), sales tax, and business numbers.

Without privacy protection, business owners need better ways to address identity theft protection, availing services like Identity Guard.

This isn’t something that affects big corporations as much, but the small ma and pa shops in your community, so small business identity theft actually hurt local community economies overall.

Why are small businesses a perfect target for identity theft?

Identity theft is a problem that creates millions of victims every year, but criminals get the largest scores from business identity theft, rather than identity theft of individual consumers. It has a lot to do with internal structure, and financial incentives given to business owners.

According to the California Secretary of State department, some common examples of business identity theft are:

• Establishing temporary office space and/or merchant accounts in a company’s name;
• Ordering merchandise or services with stolen credit card information or with bogus bank account details in the name of a victimized company;
• Scamming company employees or using phishing attacks to get to a company’s banking or credit information;
• Going through a business’ trash and recycling bins for account numbers and other sensitive data; and
• Filing bogus documents with the Secretary of State’s office in order to change the business’ registered address or the names of directors, officers, or managers of the company, which can later help thieves establish lines of credit with banks and retailers.

Furthermore, “Consumer protection laws, such as the Credit Card Act of 2009, generally don’t apply to small-business credit cards.

Even though most issuers extend consumer protections as a courtesy to small businesses, it’s a good thing to keep in mind since certain protections may not be available in every case.”

So essentially, small businesses are able to avail of business credit with better terms and loan amounts than consumer credit but have lesser protections.

One way this manifests is in how quickly consumer credit fraud is reported versus business credit fraud.

If you, as an individual, rarely use your credit card, your bank would likely immediately notify you of a suspiciously large purchase. They may even immediately temporarily block your card until they’re able to verify that you are the one making purchases.

For small businesses that make regular transactions, the quota for what is deemed “suspicious activity” is a bit higher.

A criminal could get away with running up purchases on stolen business credit much longer than with a consumer credit card, and in many cases, the criminal activity isn’t caught until discrepancies are found in expense and accounting reports.

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