Did you know that identity theft can happen to your business? Unfortunately, businesses that are targeted often end up victimized for six figures or more. The schemes are plentiful. They range from counterfeiting operations to opening up large loans and ordering products on credit. Even a relatively small scheme, such as getting hit with a bill for 50 large flat screen TVs that your CFO supposedly signed off on, could make things quite difficult for your business.
The thieves use publicly available information. Your registered agent’s name, the company executive and officers’ names (along with copied signatures from public documents they have signed), business license numbers, EINs, and more.
What can you do to prevent this?
1. Wire Transfer Precautions
If your business uses direct wire transfer, insist on dual controls (ie: two factor authentication), which would require an authorized person at your business to approve each wire transfer.
If you are not actively using wire transfers, talk with the banking institutions that you do business with to see if you can filter or block wire transfers.
2. Monitor Transactions Daily
Hire an accountant (in-house or outsourced) to help monitor transactions and balance your accounts as quickly as possible. Looking for and identifying out of the ordinary charges on a daily basis is better than doing it weekly. Weekly is better than monthly. Monthly is better than whenever you feel like it.
3. Positive Pay
Risks against business check fraud can be significantly reduced by enrolling in a Positive Pay program. Your banking institution should have one. Essentially, every time you write a check, you confirm the check number and dollar amount to your bank. If the bank receives a request to cash a check for a different amount than on the check, or a check number that hasn’t been reported, it will put a stop payment on that check and flag it.
4. Monitor Secretary of State
Regularly monitor your California Secretary of State filing online to ensure that your information is as you left it. Some thieves will file fraudulent office or address changes with the Secretary of State. Thus, when creditors or other entities verify your details with those provided by business identity thieves, they will match the official records.
5. Enroll in Credit Monitoring
A credit alert service through Dun & Bradstreet or the other major credit agencies (Equifax, Experian, TransUnion) can help keep you aware of when new accounts are being applied for. This is the single best way to keep an eye on who is using your name.
Here is an excellent resource published by the California Secretary of State for businesses.