Business identity theft is one of the most prominent challenges for the corporate sector worldwide. Criminals often pose to be official business owners or directors of some company to carry out their illicit financial crimes and get illicit monetary gains. This significantly impacts the reputation of a company, leading to financial loss at both national and international levels. Furthermore, the process is more complex than personal identity theft since fraudsters take multiple routes to steal money and perform illicit transactions. Let’s discover how scammers conduct Business identity theft and the role of Know Your Business regulation in meeting this challenge.

What is Business Identity Theft?

While identity theft is mostly associated with social security or credit card theft, business identity theft slightly varies from traditional individual identity theft. Corporate identity theft refers to incidents where scammers manipulate or misuse the identity of business owners, employees, or officials to illicitly obtain cash, loans, and credit, eventually leaving the company in massive financial loss.

Corporate identity thieves usually engage in multiple fraudulent activities, such as filing false company tax returns. In addition, businesses often have to face severe legal consequences due to negligence in implementing enough corporate security solutions. 

Common Instances of Business Identity Theft

Fraudsters use various tactics to scam and steal secret business information. However, some of the most common yet harmful business identity theft approaches are as follows:

• Similar Websites

A prominent technique impersonators frequently use is duplicating the whole design of a pre-established business website. Oblivious customers are often led to fraudulent websites via search engines, ad campaigns on social media, and emails.

• False Social Media Accounts

Scammers often create fake accounts and exploit the names, pictures, logos, and other identifying information of individuals, trademarks, and companies for fraudulent purposes. It usually takes a few days for such recently developed accounts to be noticeable. Imitators concealed with robbed identities manipulate these timeframes of smaller visibility to pitch consumers with hostile counterfeit advertising campaigns.

• Fraudulent Emails

Another common example of business identity theft is executing a brand’s symbol or name in emails forwarded by imitators to employees. This scamming tactic allows fraudsters to acquire a company’s banking details. Furthermore, such type of knowledge can be utilized for monetary frauds such as obtaining mortgages, credit lines or recognition cards in the company’s representation.

• Misuse of Tax Details

It is extremely uncomplicated for stealers to obtain the data they want. Most of the time, some details are open online for free if organizations publish papers with extensive corporate information, such as sales tax digits or license numbers of businesses. Additionally, business identity thieves often use embezzled company information to file defrauding tax returns for reimbursement.

Consequences of Corporate Identity Theft

Corporate identity theft directly impacts any sort of business. It possesses the possibility to damage a brand’s prestige and, consequently, extremely undercut a company’s profit margin. The following are the multiple hard-hitting outcomes for businesses:

• Damaged Business Reputation

The market prestige of any business is a crucial yet fragile asset that illustrates the quality of company relationships with lenders, business partners, and, most notably, customers. Therefore, when an organization is targeted by industry and corporate identity thieves, it can dramatically alter the way a company is perceived in the industry and damage the confidence it has created with its clients.

• Loss of Revenue & Customer Trust

Businesses that fall into the entanglement of fake websites often end up purchasing fake outcomes or never receiving the actual products that they spent money on. Consequently, businesses are left humiliated by their undergo and choose to go for another company next time leading to huge revenue loss at the same time.

Role of KYB in Preventing Business Identity Fraud

There’s a solution to every problem, and the Business verification approach serves as a progressive course of action to mitigate the risk of business identity theft. Thousands of businesses fall prey to corporate fraud, and KYB solutions, in this regard, identify fraudsters and minimize the risk of these illicit activities. Here’s how companies can mitigate this challenge of potential scams:

• Keeping a track record of extensive credit card reports of companies
• Conducting frequent reviews of business data to make sure that there are no fake tax returns filed by companies
• Education of staff regarding cybersecurity and other best practices
• Protection of Employee Identification Number (EIN), account number, and other personal details
• Turning on fraud alerts on bank accounts and other merchant transactions

Final Words

Business identity theft is a significant challenge that can cause severe financial damage to any company. The anonymous nature of the internet provides criminals with multiple opportunities to manipulate and misuse the identity of business owners and officials. However, with the help of KYB solutions, companies can mitigate this challenge and minimize the risk of potential scams. By implementing corporate screening, educating staff, and protecting personal details, businesses can take proactive measures to prevent corporate identity theft and protect their reputation and revenue.