What’s it like to lose your business identity to identity theft? It’s costly to start with – in fact, so costly that some businesses fail. Here is the story of what happened to one small business as reported by NBCnews.com. The company lost their identity, but found out quickly enough to escape. It’s a warning for businesses everywhere.
• What was Found: T-Data did not accept credit cards. They’d been in business for 20 years and never had. Yet, the owner, Jeff Duhl, was checking his mail and discovered over $15,000 in credit card charges that his store appeared to have accepted.
• The Setup: The identity thief had been busy – and clever. The thief created a fraudulent T-Data company – complete with a very realistic website. Next, he or she secured the services of merchant processing providers. These are the companies that transfer money from a credit card purchase into a business’s account. All in all, they set up seven different accounts with different processing companies. The business bank accounts where these companies deposited the credit card monies belonged to the identity thieves and were unrelated to the real T-Data. The fact that T-Data had never accepted credit cards worked against them. After all, to the processers, they were a new account.
• How it Worked: Once all the accounts were ready, the thieves began making small purchases usually in the $500 to $600 range from the fraudulent T-Data company with stolen credit cards. The fraudulent scheme gave them a means to turn the stolen credit cards into cash in their pockets.
• What was Stolen: It appears that no money – or, at least, not very much money – was ever transferred. The processing companies that replied reported that the scheme was caught after there were transactions, but before the charges were funded. At least one processing company did admit that the scheme had “potential”. Another noted that if a processing company didn’t catch the fraudulent action that “hundreds of thousands” could disappear over a weekend.
• How the Fraud was Discovered: The thieves had used another stolen identity instead of Jeff Duhl’s information when they started the scheme. They made a slight “mistake” in the address of the company so the processing receipts would not be received by T-Data. So, how did Duhl get them? An alert postal employee recognized the company name and delivered the mail to the right address.
T-Data and owner Jeff Duhl were lucky to get notice and get on top of the situation. Duhl acted quickly and did much of the research on the fraud himself. The processing companies get some credit. They say that 5 to 10 percent of the applications they receive are fraudulent so they are always reviewing accounts. Still, not all identity theft is discovered quickly enough to avoid damage. If you are a business owner, be prepared. Have processes in place and enforced regarding sensitive information – information about your business, your employees and your customers. Consider hiring an onsite shredding company that can shred all the sensitive documents you no longer need, and can also destroy hard drives that are no longer used but might contain sensitive. Be aware. From a scheme like what happened to T-Data to reporting and claiming fraudulent withholding to the actual use of a business credit card, business identity thieves are trying to use your good name to put money in their pocket. Protect your business by being aware that, unfortunately, it can happen to you.