If you’re a small business owner, you should be concerned about identity theft.
Identity theft is one of the biggest risks to potential borrowers today. In 2017 alone, identity thieves absconded with nearly $17 billion in goods and cash stolen through fraudulent loans and credit cards.
Small businesses and small business owners are especially valuable targets for identity theft because of the larger credit products available to them.
While federal law absolves victims of all responsibility for fraudulent borrowing done in their names, it is far easier to protect yourself than it is to deal with unexpected collections calls and embarrassing declined applications.
Here are three ways you can stay ahead of identity thieves.
1. Protect your personal details
While data breaches grab all the headlines, most identity theft is still done by taking personal identity information directly from individuals.
Be sure that the people and businesses that you give your personal information to can be trusted with it. Whenever possible, use phone apps or bookmarked websites to be sure that you’re logging into your bank and not a phishing website.
Conducting background checks on potential employees is standard practice nowadays. You should also consider freezing your personal credit report so that no lender can review it without your express authorization to the credit bureau.
2. Keep track of your credit
Identity theft rarely happens overnight. Identity thieves usually test the waters when targeting a new victim by opening several small loans or credit cards over a period of months.
During this time, they are careful to make minimum payments on the loans they took out to prevent collections calls that would alert the victim and close the accounts.
By spotting these accounts early, you can take early action to close these fraudulent accounts and drive the thief away.
There are many credit monitoring services that allow you to see your credit report and will even alert you to substantial changes, like new accounts or mailing addresses. All three major credit bureaus, Experian, TransUnion, and Equifax, provide this service for a subscription. If “free” is more your style, the Fair Credit Reporting Act requires that each bureau provide you a free copy of your credit report annually.
There are also many companies that offer free weekly or monthly credit monitoring. Some of these, such as CreditKarma, do so to market new products to potential borrowers. Some lenders, such as CitiBank or Discover, provide this service as a courtesy to their customers.
3. Have solid operation controls in place
The Association of Certified Fraud Examiners recently found that 42% of fraud at businesses with less than 100 employees could have been prevented by accepted business controls.
Appropriate controls vary from business to business by size and industry. But they share a common theme: the responsibility of managing business finances, including keeping track of cash and bank accounts, should not be assumed by just one employee. Different people must be involved at different stages of this task to discourage graft or embezzlement.
For example, if an office assistant is ever tasked with applying for a loan on behalf of the CEO, that assistant should not also have access to send payments from the company’s bank account. If the office assistant cannot write checks or wire money out of the account, they would need to involve a second person, such as an accountant or a manager, to get the borrowed cash from the business. In a company with a strong culture of integrity and honesty, that second person will report the conspiracy before any loss can occur.
More From The Bluevine Business Blog
How To Get a Business Line of Credit and 5 Mistakes To Avoid
