Early this month I was happy to discuss synthetic identity theft on the Great Day show. I briefly talked about how synthetic identity theft was also committed in the U.S. using business employer identity numbers (EINs). Crooks often target small and midsize businesses for this type of crime. After the show I got a lot of questions asking for more information about synthetic EIN identity theft.
What is business identity theft?
Put quite simply business identity theft is the impersonation of an entire business.
It can occur through multiple ways, but in the U.S. most often occurs through the use of valid EINs.
The U.S. Internal Revenue Service (IRS) issues EINs to identify business accounts that are also taxpayers within the U.S. EIN identity theft is when criminals take a valid EIN and use it with other bogus information,
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What can businesses do?
Of course every business needs to have effective information security and privacy controls and policies in place, such as those recommended by IBM. In addition to these,
to protect against business identity theft organizations should do the following.
Monitor their state business registration information. Check it at least once a year for all active and closed businesses to make sure there are no revenues or locations that are not recognized, or that do not apply to their businesses.
Sign up for digital alerts. Many states offer free email and/or text alerts that will let business owners know when their business registration information, (name, address, registered agent, business owner and officer information) has changed. Such alerts can provide an early warning of potential fraud. Most states have resource pages that provide information for how to do this.
Periodically go to the state websites where business information is provided and perform a business entity search to see the information they have for the business. Make sure the information is correct. Also check for any closed businesses. Business leaders need to make sure some fraudster has not reinstated it.
Always file state business reports and renewals on time. If business leaders are late doing this, they risk administrative dissolution of their company for failure to file.
Business identity crooks look for this type of lapse and target businesses that are classified as inactive,
suspended, in default, and so on.
Crooks love to identify businesses that appear to be lax in their record keeping because this is often a sign that they will be lax in their security,
lax in checking their business information, and sloppy in other protections as well. More opportunity for them to use the business’s identity for a longer period of time without getting caught.Protect business EINs. Too many small and mid-size businesses are nonchalant when it comes to safeguarding their EINs, usually because they are not aware of how easily their business could be defrauded if the EIN got into fraudsters’ hands. However, I’ve also seen a lot of bad advice online saying there is no risk in sharing EINs…do not believe it! Such advice may have been provided by crooks that want to get their hands on the EINs to do what I’ve described here. Know the circumstances for when EINs must be provided (e.g., opening business bank accounts, doing taxes and wages reports, and on W-9 forms), and do not give EINs in other situations.
Part of general information security controls mentioned above this list, but worth elaborating on: Secure all documents with business information and identifiers in a place that is accessible only to authorized individuals. Always protect and secure hard copy documents that contain business identifiers, account numbers, and other sensitive information at all times. This includes from the point in time documents are created, to the point in time they are disposed of. Which brings us to…
Finely and irreversibly shred documents that are no longer needed containing business here you have a company and information and/or identifiers. Also irreversibly remove such information from digital storage devices, computing devices, fax machines, copy machines and printers.
Prof. Abelardo Gerhold DDS
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