Business Identity Theft involves the actual impersonation of the business itself in order to obtain credit from other unsuspecting lenders.
Fraudsters use the identity numbers and home addresses of the directors of the business as well as the business information often freely available online to purchase goods on account. Businesses are finding it increasingly difficult to determine if the transaction is fraudulent as the forged documentation is often of a very high quality.
South African businesses have noted an increase in corporate identity theft incidents over the past year, according to the 2015 Metrofile Information and Records Management Index.
These statistics are in line with global trends according to the Breach Level Index Report for the First Half of 2015 produced by Gemalto, a World Leader in digital security.
According to this report, the leading type of data breach in the first half of 2015 was identity theft which accounted for more than half of all the data breaches globally.
The National Department of Public Works (DPW) warned the public in November 2015 of a scam that was being perpetrated by fraudsters. The scam was Business Identity Theft whereby fraudsters used fake DPW documents to order expensive goods from unsuspecting suppliers. How the fraud is conducted is by stealing the DPW’s Identity and using their letterheads and supporting documentation.
To date they have reported more than 20 companies that have been victims of Business Identity Theft and have lost more than R26 million worth of goods.
Why Your Business Could be Targeted.
Easily Accessible Information – Business Identity thieves don’t have to look much further than the internet where your company’s details are publicly available, most of which is required by law to be represented online. This information can include company registration numbers, license numbers and Directors’ information.
Company Purchasing Patterns – If an individual were to purchase goods for a large sum of money it may be flagged as unusual or raise suspicion, whereas if a business were to purchase the same amount of goods, the transaction may be deemed as a usual expense.
Ease of Account Opening – Companies are incentivized to open new accounts for businesses because they are more likely to spend more than consumer accounts.
Flexible Account Repayments – Businesses enjoy the flexibility of settling an account or paying an invoice within a certain less stringent payment period, usually 30 days from the date of invoice. In many cases, goods and services are delivered on the date of invoice which allows business identity thieves a large window of opportunity to get away with your business’s goods.
Larger Credit Limits – Businesses spend more than consumers which is why businesses would be granted larger company accounts with providers. The larger access to credit makes businesses an attractive target for business identity thieves compared to consumers’ credit access.