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The Facts About Business ID Theft
Business ID theft is a scourge that plagues many small operators and their business identity is used for various nefarious purposes, including taking out lines of credit. It can cause havoc.
Smaller companies often cannot recover from a fire at their premises or a sudden slowdown in their trade. Profitability is such that there isn’t enough slack to handle the losses, and insurance protection is often not far-reaching enough. Many businesses don’t survive a single bump in the road – regardless of what the ‘bump’ happens to be.
Here are some facts about business ID theft and how to protect against it.
Business ID Theft on the Rise
Successfully ID theft rings have been exploiting weak security systems in small businesses for many years. This has seen a significant recent upswing in activity with criminals seeking new loans and taking advantage of assistance programs relating to Covid-19.
As reported by Brian Krebs on his popular security blog, this is a growing problem as more businesses in America fail under pressure from the current shaky economic situation. Clearly, small businesses need to shore up their protection systems to ward off these kinds of threats because they could be the company’s undoing.
Not Just a Business Problem
Around seven million Americans annually have their ID stolen. While this doesn’t directly affect the business because its ID isn’t stolen, indirectly small businesses can suffer the most.
A Harris Poll from 2018 confirmed that businesses end up with fraudulent transactions on their books. The goods or services are provided, so when the transaction is charged back as fraudulent, the company is left seriously out of pocket.
No. 1 Crime to Generate Profits
Identity theft has become so rampant in recent years that even the U.S. Department of Justice has gone on record stating that it’s the #1 crime for profit.
As a result of the incentive of low costs and high potential profits, criminals are targeting businesses and people who normally transact with them. Just like how someone can gain a person’s identity to get medical care or even a tax refund in the other person’s name, companies increasingly see fraud as a major risk of online trade.
Protecting from ID Theft
When using an app or website to sign up new users, how can a business protect itself?
Being able to identify the new visitor based on their name and phone number is a good start. Using knowledge-based systems to match visitors with known people and facts about them provides a higher level of protection for companies. It’s worth it to consider Cognito HQ, which provides these kinds of verification systems. They only charge for identified customers and not when there’s the occasional no match. Cognito assures that the business is dealing with the real person and not an ID thief.
As much as companies need new customers to expand and increase their profitability, each person represents a new risk. Only by using fraud protection systems can companies have the confidence to push ahead with new business transactions without excessively worrying that it’ll turn out to be a mirage with a final loss as the kicker.
Business ID theft has become a higher profile risk for companies. Also, personal ID theft often intersects with their business operations and leads to other types of fraud too. Protection systems are needed to reduce the fraudulent transactions to a manageable number and avoid business insurance premiums necessarily rising to unsustainable levels.
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