Your contractor business could be at risk of being a victim of one of the fastest-growing crimes in the country: business identity theft. We’ve all heard of people’s stories about identity theft, but business identity theft is a threat that is serious and can cause devastating losses to businesses.
Business identity theft occurs when someone steals a company’s confidential identity information and uses it to secure credit and buy items illegally. A fraudster can open business lines of credit and even attempt to establish relationships with home improvement lenders by using stolen consumer information to obtain fraudulent loans.
What’s even more alarming about business identity theft is the substantial damages that the affected business incurs. According to Dun & Bradstreet, “it’s not unusual for the losses to be in the mid-six figures by the time the criminal activity is detected.”
Fortunately, there are steps that you can take that will help to prevent business identity fraud and protect your home improvement contractor business. Here are a few simple things you can do:
- Monitor your business credit reports. Businesses, just like individuals, need to monitor their credit ratings on a regular basis to ensure there is no suspicious activity. You can obtain business credit reports from Dun & Bradstreet, Equifax, Experian, or TransUnion.
- Understand your bank’s policies and how they affect your accounts. The Uniform Commercial Code (UCC) covers business and commercial bank accounts, but the protections for businesses are not as comprehensive as you might think. In fact, businessIDtheft.org states that “under the UCC, business account holders have shorter reporting timelines, less protections, and significantly higher liability for fraud than consumer banking customers.” This means that business owners have to be especially diligent in monitoring their accounts for fraudulent activity.
- Avoid falling prey to “phishing” scams. Educate your employees about the perils of email “phishing” scams, which are typically in the form of an official-looking email that appears to be from your bank asking you to provide confidential banking, business, or personal information. Don’t respond to any such emails and report these incidences to your bank.
If your home improvement contractor business does fall prey to business identity theft, there are some things that you can do to mitigate the damages—but you need to take quick action. Here are some steps to take right away:
- Review your state’s laws. Every state has a different set of procedures for addressing identity fraud, so make sure you understand the policies that are applicable to your state. You will want to notify your state’s authorities of the specific details of your case, and make sure to ask for a case number.
- Report the identity theft to your bank, credit card companies, and creditors. You should alert these institutions first by a phone call and then follow up in writing to notify them about any fraudulent accounts or activities. Also, BusinessIDtheft.org recommends that “in your written notification, request that the organization immediately close the account, conduct an investigation, and remove any and all references to the account from your business credit reports, as well as from your personal credit reports, if applicable.”
- Maintain detailed records. Keep track of all of your conversations with legal officials, bank representatives, and creditors. Also, follow up with all of these individuals to ensure they have received your notifications and have taken the appropriate actions.
On the bright side, many lenders, including EnerBank USA, are implementing additional security precautions to prevent business identity theft. This includes implementing a procedure that requires verbal verification of all dealer requests to change business bank account information. If you are not aware of any additional security measures your lender has implemented, ask them what they are doing to protect against business identity theft. Your lender can play an important role in protecting your business from identity theft.
For more information about how to protect your business from identity theft, go to businessIDtheft.org. And remember—you have invested significant time and energy in creating your home improvement contractor business, so you should take extra care to protect your business from identity fraud and theft.