Identity theft isn’t only a threat to your personal finances – in 2020, there were almost 100,000 reports of business identity theft. Usually, this type of theft happens when someone misuses private information to impersonate a business. Business identity thieves typically steal identifiers and credentials like employees’ names or federal tax employer identification. From there, they can fraudulently open a line of credit or apply for loans. In other cases, criminals can also commit this type of fraud using the financial information typically found on bank statements or credit card bills.

Business identity theft can threaten the livelihood of you and your employees as well as inconvenience your customers. It can harm your small business’ finances and ruin its credit history, leaving your business in debt or unable to qualify for loans. Following these best practices can help protect your small business from identity theft risks.

Use a strong password

A strong password can be one of the first defenses for your devices and online accounts. Simple passwords may be easy to remember, but they are also easy to guess. Therefore, your passwords should be at least eight characters. Be sure to include a mix of uppercase letters, lowercase letters, numbers and special characters.

Above all, change your passwords once every 90 days in case they are ever comprised. If you have trouble remembering your passwords, try a password manager.  Password managers store all of your passwords in one convenient location. You can access all your passwords using one master password. Many password managers even offer two-factor authentication. Two-factor authentication adds an extra layer of security and prevents anyone else but you from accessing your accounts, even if they have the password.

Follow digital security best practices

With many small businesses keeping their important information online, internet security is one of the most important factors to protect against identity theft. These security measures will pay off in the long run by protecting your business from the financial consequences of business identity theft.

• Secure wireless networks. Only work on password-protected WiFi networks. If you or your employees work from home, make sure everyone knows how to secure their home WiFi.
• Employee cybersecurity training. Help employees understand common cybercrime tactics, like phishing, and how to avoid them.
• Scheduled virus and malware scans. By scheduling automatic anti-virus scanning, you won’t need to remember to manually run a scan. Regular scans are vital to providing real-time protection against new threats as they emerge.

Keep sensitive information secure

Always keep sensitive information secure. In the wrong hands, information like bank statements, tax returns and customer lists can be used for fraudulent activity that can damage your small business’ finances and reputation and harm your customers. In the long term, a damaged reputation can affect your business’s cash flow. Customers and clients may no longer trust your business, and creditors can be less likely to provide loans. When dealing with important or private business information, make sure both digital and physical copies are properly stored.

• Shred documents. Before disposing of paperwork that includes private information for your business, you should invest in a shredder. Paperwork can be stolen from recycling bins or dumpsters and the information can be used for business identity theft.
• Keep file cabinets locked. For paper records that you need to keep, securely store them in a locked filing cabinet.
• Install proper security software. To prevent digital fraud, keep your computers updated with the proper firewall, anti-malware and anti-virus software.

Monitor business credit reports

Business credit reports show your creditworthiness and are key to getting your business approved for financing. They’re like your personal credit score. Regularly monitoring your business credit can help you confirm your business data hasn’t been compromised. You will be able to spot suspicious activity and stop fraud before it gets out of control. Some identity theft protection services will check your credit reports regularly and alert you of any suspicious activity.

Final words

Business identity theft affects businesses of all sizes, including small businesses. After you take the necessary steps to protect sensitive information and prevent identity theft risks, you’ll be able to focus on running your small business. For more tips on cybersecurity for your small business, check out articles from the CenturyLink blog.