Identity theft is not just a personal problem. Small businesses are also at risk for falling victim to identity thieves. Business identity theft can destroy credit in a short time and bring a small business to the brink of financial ruin.
Smallbiz Technology reported 60 percent of small businesses nationwide experienced at least one data breach during the past year. In 2010 alone, small businesses lost more than $8 billion to fraud, according to a Fox Business report, and the average amount of money in each case of business identity theft equaled about $4,851. That’s 5 percent higher than the loss in the average case of personal identity theft. The costs associated with repairing damaged credit can get steep.
Why Are Businesses at Risk?
One reason small businesses make an appealing target for identity thieves is they offer more funds and more credit to steal. Identity theft is a profitable business, netting scam artists around the globe billions of dollars each year. They will naturally be attracted to targets that offer higher potential for making a big score.
Small businesses are also at risk because they are entrusted with personal information from customers. If an identity thief can successfully hack a business database, they have immediate access to a host of information, ranging from credit card numbers to social security numbers. Many small businesses lack adequate security to protect this information.
How Do Thieves Steal Information?
Identity thieves use several methods to attack businesses. Some are sophisticated digital tricks, and others rely on traditional methods.
Some identity thieves acquire sensitive information from a small business by hacking into their computer system. These attacks often come in the form of viruses or spyware that enter from unsecured Web pages and track all activity in the affected computer network.
Other identity thieves obtain what they need from discarded documents that were not shredded first. These documents can contain everything from credit card numbers to employer identification numbers.
How Can Small Businesses Prevent Identity Theft?
Getting the upper hand against identity thieves starts with developing a plan to protect sensitive information. Companies like Lifelock help educate small business owners on how to recognize warning signs and enact preventive measures.
One important step is to safeguard data with a firewall. It helps protect each computer in a business computer network from spyware, malware and viruses.You also want to delete all your credit card information from your computer. The National Federation of Independent Business suggests creating a policy to make sure all files are encrypted and all computers are password-protected.
Small business owners can set up alerts with their bank to be notified of activity, so they can look into suspicious activity as soon as it happens.
The Small Business Administration suggests that instead of authorizing employees to use a business credit card, small business owners should require employees to use prepaid credit cards. This lets them set spending limits, deactivate a card in real time and set limits on where it can be used.
Use common sense in hiring decisions, too. Do thorough background checks on job candidates to see if they have a criminal record. It’s easier to be proactive now than to try to set identity theft right later on.
Christian Lewis is a management consultant who specializes in networking technologies.