Guide 2 Identity Theft
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What is Identity Theft
How It Happens
Types of Identity Theft
Warning Signs
Commercial Identity Theft
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Guide 2 Identity Theft > Commercial
Commercial Identity Theft
Just like individuals, businesses are at risk from identity theft. However, in the case of businesses, the potential losses can be much larger, so this can make them a particularly attractive target to criminals.
The identity thief and the confidence trickster have many similarities. It is very easy for a confidence trickster to say: "I work for XYZ Corporation, just charge it to our account". Every businesses wants to make sales, and in the rush to respond to what appears to be a legitimate customer, it can be tempting for businesses to simply accept these instructions, especially if the person appears to be credible and to know all the usual procedures.
If the thief that is equipped with a little inside information, like an order number or order form in the correct format, a business card, or some more official-looking identity document, and if there is nothing inherently unusual or suspicious about the transaction, the chances are high that the thief will simply be believed. Sales and customer service people keen for business are much less likely to turn down what seems to be a credible deal than would a suspicious accountant from the back room.
Smaller transactions are especially susceptible: a taxi fare, a routine stationery purchase. As these types of purchases are not usually closely scrutinized, they are also much less likely to be detected by a larger company through their internal auditing processes. Some identity thieves are much more ambitious: orders for goods, or sales of services (such as advertising that will never be published), are particularly fertile areas for identity thieves.
Nowadays, we tend to think the world has become too sophisticated for a confidence trickster to get away with scams like the legendary "sale of the Brooklyn Bridge". However, the longevity and huge ongoing scale of the famous Nigerian letter or email (requesting an advance money transfer) scam tells us that people and businesses today are as gullible and greedy as ever. A recent BBC report estimated this scam costs the British economy 150 million pounds each year, and that is the cost to just one of the many countries affected by this quarter century old scam.
The best defense against commercial identity theft is to have routine verification and documentation procedures in place:
- All transactions should be reviewed, but the larger the transaction size, the more important these
procedures become
- Having a supervisor approve transactions over a certain amount, creates an additional opportunity
to detect identity theft
- Credit authorization procedures should require at least some investigation before the transaction
is completed
- Implementing procedures to verify unusual delivery instructions will make identity theft
more difficult
- Many companies refuse to pay an invoice that does not have a matching company order number
- One of the best defenses is simply good customer service: if staff know a customer well
it will soon become clear if an impersonator is not part of the customer's usual team or is
not doing business in the customer's usual way.
- If necessary, more sophisticated transaction approval procedures can be used to assess risks according to past experience, and flag potential problems for closer attention
The use of information systems for fast data access and communication improve the odds of early detection and prevention of commercial identity theft. Information systems can also help streamline and facilitate the security procedures needed to prevent fraud.
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