The things you have to do – the things you don’t think twice about – could be the path for your business’s ID to be stolen. Here are 3 ways filings and registrations can be used by a business identity thief.
1. Good Faith Business Registration: In most states, the Secretary of State does not investigate or confirm the information in a business filing. They are charged to accept them in good faith. Of course, there’s a place where you sign to say that all the information is true under the penalty of a perjury. Seriously, if a crook is thinking about fraudulently using the good name, good financial standing and good credit of your business, do you think that one line is going to stop him or her from filing a falsified registration in the name of your business? These criminals will take over your identity by filing a business registration in your business’s name or changing the information on your registration. Your good credit is their good credit. They can act in your name because they’ve changed the business location or, even, listed themselves as a principal. They can buy things in your name or get credit in your name. Your business will eventually get the bills. When you’ve filed and checked that filing, that doesn’t mean you’re safe. For a filing fee of as little as $10 your information can be amended so check regularly.
What to do: First, file on time. By filing late, you’re giving a window of time when an identity thief can file his information in your name. Review your filings on a regular basis. If your state offers protection such as email alerts, sign up!
2. Self-reported Credit Information: If you check your credit report as an individual, you’ll see what your creditors have to say about you. However, on your business credit report, much of information is self-reported. Plus, it may contain other information that is valuable to the business credit thief – information like financial statements, identification of the principals, information about your operations or location and more. One business legitimately moved and when they checked their credit report to make sure the change was noted, they found an entirely different address in another state. When the owner investigated further, he found that the thieves had upped the ante by adding new revenues 10 times the amount of his reported annual revenues and increasing his employees by more than 100. A bigger company means more available credit. The business identity thief was using the credit report he or she had amended to buy merchandise in the name of and using the credit of the legitimate business.
What to do: Check your credit report – usually a Dun and Bradstreet report. Make is a habit to do it on a regular basis. Don’t give an ID thief a window of time to use your credit and disappear because you haven’t bothered to check the report.
3. Fraudulent Use of a Closed Business: The business may have been dissolved or be “dead”. You’ve done it all, including filing articles of dissolution. You’re not safe. In 2010 in Colorado, 80% of the victims of business identity theft were owners of delinquent or dissolved businesses. Most states allow a company to be reinstated for a period up to two years. That’s a time window that an identity thief can drive a truck through to use the facts about your business for fraudulent gain.
What to do: Acknowledge that you are still at risk and continue to check the registration, filings and credit reports for the period of time the business can be reinstated.
Fraudulent filings are just one way an indent thief can steal a business identity. Checking records is just the beginning. Make sure that all credit accounts and bank accounts are reviewed on a monthly basis. Have secure storage for sensitive documents. Make sure that documents that are no longer needed are completely destroyed because dumpster diving is not uncommon. Consider hiring an onsite shredding company that will shred to the highest industry standards right before your eyes, provide locked storage for documents waiting to be shredded and secure storage for documents you need to keep. Be alert. Train your staff. Be safe!