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Business Identity Theft

Overview

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Business Identity Theft
Getty/Burak Pekakcan

Business identity theft, or corporate identity theft, is a lesser known type of identity theft, but something that everybody should know about. It doesn't make much difference if your business is a small home based business like a network market (or multi-level market) or a brick and mortar storefront. While business owners may be unaware of it, there are many ways identity theft can affect your business, from loan acceleration and data breach to employee training.

While identity theft is committed by individuals, or identity theft "rings", it is very difficult to catch identity thieves, much less prosecute them. This is a big reason the crime has grown so rapidly over the years. The fact that the courts have taken the teeth out of these laws doesn't really help much either.

The typical mindset is to fix the blame instead of the problem: somebody should pick up the bill. And while some identity theft laws have been put into place to deal with identity thieves directly, most laws such as FACTA, HIPAA, and the Red Flags Rule penalize businesses. In 2008, the FTC said 87% of all businesses have no clue these laws applied to them.

Business owners are familiar with terms like "universal default and loan acceleration, but may never realize these terms become a harsh reality when they are a victim of an identity theft personally.

Data Security laws, such as FACTA, and the Red Flags Rule apply to all businesses whether they have a Federal Tax ID number or not. If you run a business from your laptop, and your laptop gets stolen, you will spend days learning about these laws while you try to keep your business running smoothly.

If you have employees there are additional considerations. Data Security laws require you to train your employees how to protect the information they work with. Employees may jeopardize your clients' information because they don't know how to handle it properly to keep it safe. And an employee who is a victim of identity theft may find it easy and profitable and to sue you because her purse was stolen at work, simply because you never told her she had to keep it safe.

If you do happen to have an Employer Identification Number, or EIN, you may find too late that a company has an identity that can be stolen as well.

When it comes to identity theft, if you're a business owner, don't wait until after the fact to learn about business identity theft. Not only are you at a far greater risk of being affected by some form of identity theft, but if it happens to you, your business, your clients or your employees, it can easily close your doors for good.

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