Firm Blog Postings

Business Identity Theft

Mountain or Molehill?

by: Paul Cogswell, JD, CFE, CCEP

Much is written about identity theft and most all of it is geared towards protecting your individual identity from being stolen. But what about your business? Corporate identity theft can often times be easier to succeed than personal identity theft.


Here are just some common examples.

• Employer Identification Number (EIN) – in many respects an EIN is a social security number for your business. It is required to have to open bank accounts, merchant credit cards, and for state and federal filings. In criminal tax refund frauds, criminals report false income and withholding to generate a fraudulent tax refund. The Treasury Inspector General for Tax Administration (TIGTA) reports that new identity theft patterns are constantly evolving and keeping up with it has become a challenge.¹ Protecting the EIN of your company and periodically checking on business credit reports is an essential part in the toolkit of business identity theft prevention.


• Fraudulent State Business Registrations and Filings- In most every state the Secretary of State manages the registration and filings for businesses. Keeping an eye on your businesses filings especially the UCC filings is also important. Identity thieves can attempt to fraudulently change aspects of your filing such as the business address or the registered agent in attempt to take over your identity. They may also watch to reinstate a lapsed filing or closed business, or file as a dba or an intentionally similar name. Once again, paying attention to the SOS records for your business can prevent you from becoming a victim of these types of scams.


• Business can also be easily impersonated via email or deceptive websites that hijack your brand or trademarks in attempt to defraud clients or ruin your reputation.


• Impersonating a business in order to create a fraudulent merchant account – Thieves will also create a merchant account for your business where they can utilize stolen credit or debit card information in order to obtain funds. In one case ID thieves mimicked legitimate companies and set up over 100 fake businesses utilizing over 1million stolen or compromised credit cards and making “micro” purchases between 25 cents and 9 dollars and netting almost 10 million dollars.²


• In a relatively new approach to a very old scam, ID Thieves will engage in “address mirroring” where thieves will try to mirror a physical address in order to obtain credit and goods and then disappear. In days past this was popularly called a bust out where the business was set up for the purposes of going under after doing as much damage as they could.

Variations of these schemes often involve phishing and other cyber related breaches into data, but in the end it almost always involves a loss of time, money or reputation to the victim business. There are several useful resources to the business person to help educate and prevent identity theft, but in the end having a well-articulated counter surveillance program and awareness of your business persona is perhaps the most useful of all of these tools. ³


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