Business owners are a lot of things. You may not all share exactly the same traits, but one thing is for sure and that is you are all visionaries.
Whether you are a company of one or 100, you woke up one day and decided to be your own boss. Perhaps you opened a gourmet bakery, or you produce stylish handbags with sustainable manufacturing. A skilled woodturner, you became inspired to use your artistic gifts to create backyard feeders that are now in high demand. Maybe your home-brewing hobby led you to market your unique craft beers.
The “whys” behind your business origin stories are surely inspiring. But whatever motivated you at the beginning, the fact is that none of it could have come to fruition without the long hours, careful planning and determination to succeed that you invested in your business. That’s why we are dedicated to empowering business people in the on-going fight against business identity theft.
Business owners who are uninformed and unarmed in this constant battle could one day find that all they have worked and sacrificed for has been stolen out from under them and eventually have to resort to bankruptcy protection to keep their business alive. Allow me to explain:
What is business identity theft?
Business identity theft comes in several forms. It ranges from sleight of hand, such as creating a bogus website that is nearly identical to that of the business being targeted for theft, but with a slightly different URL (most people don’t recognize the difference) to the outright hijacking of a company by simply and insidiously exploiting a government loophole. This latter form of theft I experienced, and it’s what inspired me to launch Company Alarm and crusade on the behalf of fellow business people.
In 2015, I was a successful entrepreneur with multiple business interests. I was shocked when I received a foreclosure notice for a five-acre parcel of property valued at $5 million that one of my companies held. Naturally, I thought there had to be some sort of clerical error involved. In time, I learned the startling truth that the thief, someone I was never before aware of, was able to log onto the Nevada Secretary of State’s website, where businesses in the state are registered, and replaced my name with his own as owner of the company. All the thief had to do was pay a nominal fee and correctly fill out the online form and just like that, he had control of the valuable property and other assets held by my company.
This cyber criminal was then able to obtain $2 million in loans backed by the reputation of my company and used the valuable investment property as collateral. Three years and over a quarter of a million dollars in legal fees later, I’m still fighting to get my property back. Despite the epidemic of business identity theft cases, most secretary of state offices in the U.S. are not making changes to safeguard the vital information business owners register on secretaries of state websites. In fact, a startling 83% of respondents polled by the National Association of Secretaries of State said they are not even tracking business identity theft complaints!
Someone had to do something and Company Alarm was created to keep other business people from going through what my family and I experienced.
What happened to me is by far no aberration.
In a report, “Business Identity Theft in the U.S.,” the National Cyber Security Society documents thousands of victims of business identity theft and billions of dollars in losses.
The types of business identity theft mentioned in the report include financial fraud, tax fraud, trademark ransom, and website mirroring and tampering.
“While some business identity data can be found in paper records, the majority of the data stolen or compromised resides in online systems – and it is easy to find data on businesses. Various online systems maintain information on where a business is located, the name of the business owner, revenue, number of employees, their Tax ID number, credit worthiness and registered agent,” the report states.
Someone other than you having access to your Tax ID Number or Employer Identification Number is just as bad as someone getting hold of your personal Social Security number. Think about that for a moment!
“State registries found an increase in business identity theft after business records became electronic,” the report continues. “Criminals are changing business records to their advantage – even as simple as a change of delivery address so that illegally purchased goods can be ordered and delivered without an owner’s knowledge until of course -- the bill arrives. Consequently, the fraudulent purchase remains on the business’ line of credit and requires a significant investment in time and resources to reverse the charge.”
As if that wasn’t troubling enough, the report also points out that “Current statutes such as the Fair Credit Reporting Act protect consumers, not businesses.”
This can end in bankruptcy
Like thousands of others, I was blindsided by a form of cybercrime I previously didn’t know existed. Company Alarm has since become educated on other internet-based schemes targeting businesses. Each one can mean bankruptcy for unprotected business owners. Now that you know how I was targeted, let’s take a look at the all the various types of business identity theft that can cost you your company, its assets, and your business’s reputation:
- Hijacking: When cyberthieves successfully take control of your company – and remember, all it can take is a few minutes and a nominal payment to the secretaries of state – they can liquidate assets and access fraudulent lines of credit to generate cash. Other related schemes include using your business’s identity to make large purchases and then sell the goods for an easy profit.
- Mirroring an address: By obtaining a mailing address (sometimes it can be a PO box, or by renting space near your office, and even using an unsuspecting person’s or business’s address) criminals can impersonate your business and operate as though they are you – and customers are usually none the wiser.
- Fake website: After cloning your business’s website and creating a URL that is just slightly different than yours but close enough that it’s difficult for unwary people to notice, cybercriminals can divert customers and visitors from your legitimate website to their bogus one and conduct transactions and other business while masquerading as your business.
- EIN theft: Your EIN is as valuable as your Social Security number. With it, thieves can file false tax returns, obtain credit and cash and perpetrate any number of scams. Meanwhile, all of that fraudulent activity is conducted with your business identity.
Any of these forms of business identity theft can result in bankruptcy. Besides draining assets from your company, these scams typically end up with the victim trying to repair a severely damaged reputation and rebuild creditworthiness – and for some, the damage could be irreparable. Meanwhile, some companies under such stress may not be able to sustain operations as access to capital is disrupted.
Sure, you – or your clients if you are a registered agent – can fight to get your property back, but as I learned, it’s a years-long battle that requires tremendous amounts of money and time. Not all business owners can afford to wage such a protracted battle. That’s why the best offense is a rock-solid defense. Company Alarm offers just that. For less than 50 cents a day, you can secure 24/7 monitoring of your critical information that is sitting there vulnerable on secretaries of state websites and portals. We notify you by convenient text the moment any of your information is changed so you can stop cyberthieves in their tracks before they can do you any further harm.
For more information about the business identity theft schemes that threaten to steal what you worked so hard to build, click here to download our comprehensive report “Business Identity Theft Schemes.”
Company Alarm is dedicated to helping business owners protect what they have worked so hard to build. Our monitoring software is designed to prevent cybercriminals from exploiting loopholes to hijack your company and assets. To sign up for this low-cost, value-added protection, click here.