Business Identity Theft-A Note to Business Owners

The subject of identity theft has been beaten into the ground, so this article may not grab the attention of readers until after they search the net as victims. The focus is usually on the individual, but what if you were a business owner and someone stole your business's identity. It can and does happen.

Fraudsters find retail businesses with owners with good to excellent credit, but no website. The fraudster will start a website for the business. The fraudster then applies to accept credit cards under the business name with just a few key pieces of data (Owner's Name, Social Security Number, Date of Birth, Address, and Tax ID). Once the account is approved to accept credit cards, the fraudster begins running stolen credit cards through the merchant account.

If the fraudster has been doing this long enough they will know the thresholds the credit card processors set and can often run a scam for 45 to 60 days. As the credit cards have been run, the credit card processor deposits money into a checking account which the fraudster will empty daily.

Once the credit card holders begin receiving statements showing the fraudulent charges, they will begin disputing the charges via the chargeback system. The merchant processor will see the chargebacks coming in and attempt to collect the money from the bank account that the fraudster emptied.

Now how does this affect the business whose identity was stolen? When the processor realizes fraud has been committed, they will begin searching for the owner of the business. Once found, collectors begin attempting collection. Processors list the merchant on "MATCH" which tells other processors fraud has been committed by a merchant. This alone can cause a merchant the loss of the ability to take credit cards. Some processors list negative marks on personal credit and D&B. Having a business identity theft can literally put a business under in a very short period of time if not reacted to properly.

Credit card fraud committed against an individual will run a few thousand dollars, but fraud against a business owner can easily reach in excess of $25,000 and higher very quickly.

What steps should you take as a business owner to protect yourself?
Add a consumer statement to your credit bureau reports that states, "Do not extend credit without contacting me personally at XXX-XXX-XXXX."

Google your name and your business name frequently.

Hire a spidering service to ensure brand/name integrity on the internet.

Periodically pull your credit at least every 6 months and look for suspicious inquiries.

Write letters to your congressmen about the government agencies posting your data online for the world to see. Did you know many states post your business information, your ownership information, and tax id online? Most are free.

Starting your own business takes a person's all. You put your blood, sweat and tears into it and no one should be able to take it away so easily. This is only one way a fraudster can steal your business's identity. There are many more. Be aware of the risks and watch out for you and your employees' futures!

If you have any questions about how to handle the situation as a victim or would like more information on uses for stealing a business identity, feel free to contact me at dsellens@tcbconsultingonline.com.