Cybercrime has increased dramatically in recent years, particularly since the outbreak of the COVID-19 pandemic and the widespread adoption of online operations.
According to cybersecurity experts, data breaches will cost the global economy more than $6 trillion this year. That’s more than 60 times the total amount of cybercrime committed in 2015.
In 2022, identity theft will be one of the fastest-growing types of cybercrime.
The theft of a person’s identity already causes a lot of problems for the victims. According to the Federal Trade Commission, there were over 1.4 million reported cases of cybercriminals stealing someone’s identity for their own gain in 2021 alone.
Identity theft, on the other hand, does not only affect individuals. It’s also on the verge of becoming a major problem for businesses.
In this article, we’ll go over the most important facts about business identity theft, as well as how to protect yourself from it.
What is Business Identity Theft?
Business identity theft, also known as corporate identity theft, occurs when cybercriminals take control of your company’s identity rather than your own.
In the end, they want to make money, either by demanding a ransom or by exploiting your company’s name and financial information to make illegal profits.
In either case, business identity theft can be extremely damaging to a company’s reputation, legal standing, and financial standing.
However, it’s important to remember that business identity theft is not the same as a data breach.
In a data breach, cybercriminals usually attack your system in order to extract data in bulk for illegal purposes. They could, for example, attempt to break into your customer database and sell their social security numbers or payment information on the dark web. Business identity theft, on the other hand, means that they directly use your company’s information.
They can use it in a variety of ways to further their own interests. The most common types of business identity theft and how they may affect your company are listed below.
1. Financial Corporate Identity Theft Losses
Financial identity theft is one of the most common types of corporate identity theft. That means cybercriminals are using your company’s information to conduct transactions.
Criminals can, for example, obtain new lines of credit, credit cards, or loans in your company’s name.
During the pandemic, it was extremely common for criminals to impersonate a business and apply for COVID relief fraudulently. The Small Business Administration (SBA), which was in charge of administering the relief loans, reported receiving 1.2 million loan identity theft complaints in August 2021.
For cybercriminals, stealing a company’s identity for financial gain has numerous benefits. Because businesses frequently order in bulk or conduct larger financial transactions, using a business as a front rather than a private individual raises far less suspicion.
2. Defending Against Tax Fraud and Legal Battles
Cybercriminals filing fraudulent tax returns to obtain refunds or subsidies is another common form of business identity theft. Both at the state and federal levels, this can occur.
In many cases, the information required to commit corporate identity theft is readily available. Many businesses even make documents available on their websites that contain information such as corporate sales tax numbers or business license numbers.
If your company’s identity has been stolen in this way, you’ll have to go through a long and difficult recovery process that includes tax penalties and audits.
3. Ransom for a Trademark
Trademark ransom is one of the most devious forms of corporate identity theft. Nefarious actors use this site to register your company’s name or logo as an official trademark. Then they demand a ransom for its release from you. You wouldn’t be able to continue using it otherwise.
If you haven’t adequately protect your business, this can be disastrous. This usually entails submitting the required trademarking paperwork to the United States Patent and Trademark Office.
If you don’t file a trademark for your company name, someone else can do so in your place and claim you’re in violation of the law.
This type of identity theft was first reported in 2018, and it is a problem both at home and abroad. After interviewing state officials on business identity theft, the National Cybersecurity Society classified it as a novel type of scam at the time.
4. Disguised Online Personas on Your Website and Social Media
Identity thieves can also jeopardize your business by seizing control of your online presence. That includes your website and social media accounts, in particular.
Customers’ primary contact with businesses is often virtual in today’s online-first world. Even if they go to a physical store later, most people will check out a company’s website or social media profiles first.
Cybercriminals can directly target customers who trust you by manipulating what appears on your website and in your profiles.
They could, for example, use your social media accounts to spread malicious links. Customers who click on them, expecting a coupon code or a new blog post about your products, will instead download ransomware.
Another tactic used by hackers is to replace payment information on your website with their own accounts, resulting in customer payments never reaching you instead of ending up in their pockets.
5. Loss of Customer Trust and Reputation
Finally, one of the most serious and difficult to quantify consequences of business identity theft is the loss of your reputation and customers’ trust.
If your company’s identity is stolen and used for financial fraud, it will have a negative impact on you. It will appear that you were the one who committed the fraud at first. In the end, however, it indicates that you were unable to protect your own company’s data. As a result, potential customers or partners may wonder if you’d be capable of protecting their data.
If criminals use your company’s identity to target customers directly – whether through malware, fake invoices, or phishing messages – the situation becomes even direr.
They are unlikely to put their trust in a company that has cost them money or caused them significant inconvenience again.
It’s difficult to gauge the overall impact of corporate identity theft, especially since relatively few statistics exist. However, the summary effects of suffering a successful data breach can serve as a benchmark.
According to recent statistics, 60% of small and mid-size businesses shut down within six months of being harmed by a cyberattack. The main reason for this is the loss of customers’ trust, not the financial loss.
How to Prevent Business Identity Theft
Given all of the potentially disastrous financial, legal, and reputational consequences of business identity theft, you must take precautions to safeguard yourself. And don’t forget about your clients.
Fortunately, there are a few simple, doable steps you can take to protect your business from identity theft. To summarise, you must remain vigilant, train your team, and invest in adequate defenses.
Review your accounts on a regular basis
To begin, keep an eye out for any unusual activity in any of your accounts. Unexplained charges and listings are frequently the first indications that something isn’t quite right, especially in the case of financial corporate identity theft.
Keep track of all of your retail credit cards and bank accounts, as well as your credit reports. Because credit bureaus don’t usually share information, you’ll need to keep track of your credit with all of the major consumer and commercial credit reporting agencies – Equifax, Experian, TransUnion, and Dun & Bradstreet.
It’s critical to follow up immediately if you notice any charges that aren’t immediately obvious, or if you receive inquiries from loan offices you’ve never contacted. You’ll be able to limit or even prevent damage this way.
Put a Cybersecurity Policy in Place for Your Team
The weakest link in a chain determines its overall strength. The same can be said for your team, particularly in terms of cybersecurity.
You must ensure that your cybersecurity procedures are in place. And that everyone on your team understands how to follow them. Making cybersecurity part of your onboarding process and having regular check-ins with your team members are the easiest ways to do this.
It’s critical to establish guidelines for what data can be shared, with whom, and under what conditions. This is especially true for information that can be made public on your website and social media pages.
In addition, you need to ensure that all your team members can easily recognize phishing attacks that aim to extract sensitive business information. They must also be confident in their ability to use cybersecurity software.
Make an investment in cyber-security software
Investing in appropriate software defenses is a second component of strengthening your business’s cybersecurity defenses against corporate identity theft.
Most likely, you already have basic security in places, such as password managers, VPNs, and antivirus. (If you don’t already, you should!)
However, there are solutions that can go even further in preventing business identity theft. Any attempts to extract sensitive information can be thwarted by identity theft protection software. Furthermore, these solutions continuously monitor your financial accounts and credit scores, alerting you to any irregularities.
Dark web monitoring is also available through many identity theft protection services. This means they use artificial intelligence and machine learning algorithms to scour the darkest corners of the internet for any evidence of your sensitive business information. If it does, you will be notified and will be able to take action right away.
This way, you’ll be alerted right away if your company name is being used fraudulently. As a result, by issuing a warning, you’ll be able to limit the damage to your reputation and the risk to your customers.
Keep your business information safe
Finally, make sure that none of the elements that make up your company’s identity is accessible to the general public. Or, if they are, that they are protected by law.
The legal and trade names of your company, as well as its legal entity type, address, and formation date are all pieces of identifying information. To safeguard this information, you must understand how and where it is stored, as well as who has access to it.
Furthermore, you must carefully manage the information held by your state registry office. To begin, you must first determine which states you are registered to do business in. Once you’re aware of this, you can choose a strong password and username for any online access portals to ensure that your information is safe. You can also sign up for automated alerts in some states. You’ll get an email every time your information is updated in this way. Similarly, some states allow for the activation of two-factor authentication. This is a fantastic extra layer of protection.
With regard to your online presence, you also need to take steps to keep your accounts and your website safe. Make sure your social media accounts are password-protected with long, complicated passwords. Where possible, activate two-factor authentication.
You should also perform regular website backups and malware scans. Make sure your firewall is turned on and that any transactions that take place on your site are encrypted using HTTPS. Most cybersecurity website plugins will provide this level of protection, particularly if you upgrade to their premium plans.
Finally, in any country where you want to do business, you must register a trademark for your company’s name and logo. Any attempts at trademark ransom are thwarted as a result of this.
Start Building Your Defenses Against Business Identity Theft Now
Corporate identity theft can be disastrous for your company. Hackers using your company’s name to commit fraud spread malware, and defraud customers can have a variety of negative consequences, ranging from financial loss to loss of customer trust.
You must be vigilant and closely monitor your business information and financial accounts to protect yourself. Keep an eye out for red flags and act quickly if you see them.
Ascertain that your team follows strict cybersecurity guidelines and is aware of which information must be kept private.
Invest in cybersecurity software, particularly identity theft monitoring services, and strengthen account security and trademark registration to protect your business information.
That way, you’ll be able to safeguard your company’s identity as well as yourself and your customers.
Learn more from business and read In 2022, Here Are Some Cybersecurity Tips For Young Startups.