Identity theft is all about information. How much information is available to the public determines your susceptibility to business theft. Business credit reports are an important part of business but can be used by fraudsters to make huge thefts. Imagine shipping thousands of dollars’ worth of product to a company that didn’t exist or never requested the purchase. The effects on your company could be devastating.
What Is A Business Credit Report?
We have all been taught the importance of a credit report. Your credit report retains several important pieces of information such as your personal information, credit lines you have (bankcard or loan), credit inquiries, and outstanding debts. This report helps determine your credit worthiness, so a lender can decide whether to lend to you and what interest rate to charge you. Business credit reports are very similar. They are used as a source of information for lenders to determine credit worthiness, insurability, and likelihood of timely payment.
Differences Between Business and Consumer Reports
There are a few major differences in business credit reports that work in the favor of criminals:
- Business credit reports are available to virtually anyone
- They can be readily purchased
- Most of the information provided is self-reported by the company
These facts provide increased opportunities for would-be thieves to exploit, allowing them access to lot of information about the company, and with a successful identity theft to change the business’s credit report to provide more favorable terms for credit, loans, and for goods (many companies check a business’s credit report to determine its legitimacy for the amount ordered) by increasing the size of the company and its returns.
Fake Credit Applications
Thieves don’t always have to purchase a credit report to gain the information. Thieves like to mail out fake credit applications to businesses in order to trick them. One of the favorites is to get a hold of a real business application from a credit card company or lender, and simply change the return address to their address. The business owner receives the application, fills it out because he is strapped for cash, sends it back, and now the thief has access to all the information he needs.
The Danger of Exploited Credit Reports
Once a fraudster has accessed, he can do several things. Usually he will manipulate the information to fit his needs. Once that is done, he essentially has a company credit card, or even worse, a company credit line which may be big enough to purchase very expensive things. For example, a company recently shipped an order of product worth about $500,000. When they contacted the company who purchased it, the company had never placed that order. The fraud had the product shipped to his address and was long gone with the product by the time authorities could be notified. In addition to these possibilities, the business credit report usually includes information about the owner, principle, and high level executives. This can also be important information for the theft, who will have no problem finding nefarious uses for it.
Make Sure to Protect Yourself
One of the biggest concerns is the ease with which frauds can access and even change records. Until the keepers of those records have more protective systems in place, it is important to check your corporate filings regularly, not only to ensure they’re up to date and accurate, but to monitor any changes. Sign up for emails alerting you when a change is made, if this function is available. Pay attention to unsolicited credit cards, application, or calls from collectors. Check and update government records frequently. It’s recommended to create a reoccurring process to check for vulnerability, just as you would have your computer scanned for viruses.
For more information about business identity theft, and the insurance you need, please contact the experienced professionals at TJ Woods Insurance Company, Worcester, MA today for help. Our experts would love to answer your questions or assist you in reviewing what specifically your business insurance policy covers. You can also read our whitepaper The 6 Business Identity Theft Scams to Watch Out For. We also offer the full spectrum of business insurance, including errors and omissions insurance, and directors and officers insurance.
