In its basic form, ID theft is a crime that impacts individuals. This happens when a person uses the identification data of another person in order to some sort of gain (financial, professional, or personal). However, as things got more digitalized, ID theft also impacts businesses and can have ugly long-term consequences.
According to the Identity Theft Research Center, the number of data breaches in 2021 has already surpassed the total of 2020 by 17%. This is extremely worrisome considering that cybercriminals got quite busy during the pandemic. They took full advantage of the vulnerabilities created by the economic and social unrest that followed 2020 and relentlessly attacked both organizations and individuals.
Furthermore, the risk is higher for companies that made the move to remote work without having a proper plan. This happened for many small and medium-sized businesses (SMEs) which led to an increase in data leaks, phishing and ransomware attacks, and more.
So today we are going to discuss ID theft from a business’s perspective. What can happen if your business doesn’t use proper identity theft protection services and systems to guard one of the most valuable business assets – data.
#1: Inability to Make Payments
If your bank accounts are breached, there’s a high chance all the money will vanish without a trace. Furthermore, thieves can use your business’s identity to make expensive purchases, apply for loans, or enter agreements that are not advantageous.
All these can damage your ability to make payments and keep a constant cash flow. As a result, you may be forced to delay salary payment and leave supplier bills unpaid. Furthermore, you may be forced to let valuable employees go and cut ties with suppliers and business partners because of loss of income.
#2: Loss of Reputation
In business, reputation is one of the most valuable assets of a brand. It shows people trust your products or services, which often translates into an increased income. Similarly, business partners will be more open to the idea of collaboration if your brand is well-seen on the market.
However, everything can go downhill if you fall victim to an ID theft scam. Not only will this put you in an impossibility to make payments, but it may also damage your reputation in the market. This happens if the thief gets hold of your business’s social media accounts, emails, and other communication channels.
#3: IRS Involvement
Corporation ID theft has a larger reach because the thieves control an entire organization. Therefore, if something goes wrong, it will attract the attention of state and federal tax authorities.
For instance, if the IRS receives a fraudulent tax return claim in your business’s name, they will take a deeper look into your reports and even conduct an audit. This is not a pleasant experience even during regular times, but it can turn disastrous under such dire circumstances.
If you can’t prove your business wasn’t the one to initiate the claim or various purchases and contracts, you and the business will be considered legally liable.
#4: Personal Liability
Any breach of security can put your business and yourself at risk because criminals won’t hold back from using the data to their advantage. This way, someone who assumed your business’s ID can easily enter contracts, make promises they won’t keep, engage in all sorts of activities, and more without worrying about the consequences.
This is possible because your business, employees, and even partners will eventually end up paying the price. Furthermore, as the business owner, you may be directly responsible for some of these actions.
Plus, even if you manage to prove your innocence, the process is frustrating, lengthy, and extremely difficult.
Small businesses look towards digital transformation, but they also need to consider the risks that come with it. One of the reasons small businesses are often the target of cybercriminals is the lack of a proper cybersecurity system that’s common with such organizations.
Luckily, you can stay away from the frustrating experience that is ID theft and data breaches by investing in a solid security system that can be scaled to meet the needs of remote employees. It may be a bit of an investment at first, but you will get your money back by staying safe and away from any prying eyes.
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