So far in this space I have been writing about identity theft only in terms of personal identity theft. To change gears a bit, today I will talk about "business identity theft," and especially small business identity theft — a very fast growing aspect of the whole national identity theft epidemic.
In its "2012 Identity Fraud Report: Social Media and Mobile Forming the New Fraud Frontier," Javelin Strategy & Research said "Small business owners are being disproportionally victimized by identity thieves."
Here I am not talking about scammers trying to steal customer or client information from a business. That of course happens all too frequently. Rather I am talking about a business' identity taken as a means to steal money or product from that business, or use the stolen identity to steal from a third party. Oftentimes the stolen identities are used to establish lines of credit with banks and retailers.
Here are some specific examples:
- Identity thieves created phony payroll checks almost exact duplicates of the real things and cashed them at check cashing outlets in New York.
- In California, scammers rented office space in the same building as a legitimate business, ordering corporate credit cards or retail merchandise in the business' name (and their newly rented office number), and then escaped before their deception was discovered.
- In Tennessee, scammers created websites made to look like the sites of legitimate car dealerships. They listed amazing deals for both new and used cars and then pocketed the deposits people made to get the deals and split before the scam was revealed.
- In Georgia, scammers opened cell phone accounts under the name "Georgia Powers." This name showed up on the caller IDs of people and businesses they called. People thought they were receiving calls from the large public utility "Georgia Power" and the scammers were able to get individuals to divulge personal information and also to obtain merchandise thought to be going to the utility.
- In an audacious Nevada scam, the names of a small business' officers and board of directors was changed through filings with the Secretary of State's office. Then the scammers "sold" the business to an unsuspecting third party.
Perhaps the most complicated scam — actually a double scam — happened in Minnesota when scammers got hold of a business' check and recreated it on their computers and laser printers.
Now here is where this scam gets a bit complicated. The scammers sent out letters to perhaps hundreds of recipients congratulating them on winning a $50,000 lottery they did not even know they entered just by shopping at a local Mall. Enclosed with the letter was a phony check drawn on the business ranging from $2,850 to $3,950 and called the recipients' initial winnings. The "winners" were told to deposit the checks and after they had cleared to wire $2,000 to cover the "tax clearance fee" and then the balance of the $50,000 prize would be sent by FedEx or UPS.
The initial checks that were deposited cleared. The company didn't know it had a problem until it started receiving calls — eventually more than a hundred — asking if the whole thing was real. In the meantime the scammers made off with the tax clearance fees from those who followed the instructions as well as the personal information the winners were required to provide.
Besides showing you can never underestimate the resourcefulness of scammers, these examples show the range of illegal activities that small businesses must guard against.
There are steps that businesses, especially small businesses, can take to guard against identity theft. I'll look at some of these safeguards in my next blog.