Business Identity Theft: Mirroring

Business identity theft is a growing crime. Business identity theft can be easy, low-risk, and very lucrative, making it extremely appealing to interested criminals. There are many different business identity theft schemes that criminals will use to scam businesses out of their hard earned money. It is important for business owners to be aware of these schemes to know what to look out for and how to avoid business identity theft.

Business Identity Theft, TJ Woods Insurance Agency, Worcester, MAPhysical Address Mirroring

One of these schemes is known as physical address mirroring or the business bust-out scam; this is when a criminal closely mirrors the physical address of the unsuspecting target business in order to obtain credit, loans, cash advances, and goods and services in the victim business’ name, according to Business ID Theft. If thieves can avoid detection and suspicion by choosing the right location and target business, physical address mirroring can be surprisingly simple and effective for criminals.

How it Works

Business identity thieves usually follow these steps when using the address mirroring scheme:

  1. Identify the target company and a suitable location. Address mirroring most often occurs in large office buildings, with multiple business tenants and floors that share the same physical address. Having a large number of occupying businesses within a building or multiple buildings reduces the likelihood that the thieves’ activities will attract attention or suspicions.
  2. Collect useful information on the target company. Knowing how a business operates and other key information can help business identity thieves more closely mirror their target business, making it easier to get away with. In order to reduce the chances of raising suspicion and maximize their illegal gains, thieves will attempt to gain information about the company’s finances, credit reports, suppliers, owners and officers, and general business activities.
  3. Set up the phony business. Once the target business is identified and useful information is collected, business identity thieves will rent or lease space in the same building. They most often rent the space using false information and stolen credit cards obtained through previous criminal activity. To keep a low profile, the thieves will usually set up on a different floor or in a low traffic area of the building. They also will not put up business signs or other indicators of their business activities. To avoid raising suspicions, they may move in a few pieces of office furniture and have one person there to keep up appearances and accept the deliveries.
  4. Begin the fraudulent activity. Once the phony business is established, the thieves waste no time and quickly get to work. It is typical that the business identity thieves will either apply for credit cards, lines of credit, or loans in the business’ name or they will purchase high value goods (from any company that accepts purchase orders, offers invoicing, or payment terms) that are fast and easy to sell. Credit is maxed as quickly as possible, and orders are expedited so the thieves can take off with the goods before they get caught.
  5. Disappear and move on to the next victim. Once the thieves have received their fraudulent purchases, have maxed out the business’ available credit, or have begun to raise suspicion, they pack up and disappear. The business that the thieves were impersonating will begin to receive phone calls and correspondence from creditors seeking payment. They must prove that they did not order or receive the goods that were actually delivered to their physical location, leaving the business with a horrible mess to clean up, that can take years to resolve.

Physical address mirroring and other business identity theft schemes can mean disaster for businesses. Being aware and knowing what to look for are the first steps in protecting your business. To learn more on how you can protect your business from identity theft and what your insurance policy covers, contact the experienced professionals at TJ Woods Insurance Company today.