Identity Theft Threatens Every Small Business

Identity theft has become one of the fastest growing crimes in the United States. Estimates from Javelin Strategy & Research 2012 12.6 million people had their identities stolen in 2012..

Now identity thieves are taking on a new target. The target has more money, is easier to steal larger sums of money and the theft may not be noticed for quite some time. Who is the new target? Small and mid-sized businesses!

A study conducted by the Ponemon Institute found that the number of cybercrime incidents reported increased by 56 percent and the average cost to a mid-sized business now totals $6 million. Included in that estimate is the “direct, indirect, and opportunity costs that resulted from the loss of theft of information, disruption to business operations, revenue loss, and destruction of property, plant and equipment.”

The study goes on to say the time needed to respond to a cyberattack on mid-sized businesses increased from 14 days to 18 days, and the daily cost of responding to cyberattacks has increased from $17,600 to $23,000. Resolving the consequences of a data breach is costly, on average $416,000.

A recent Javelin Strategy & Research Study found that although identity fraud among small businesses had decreased since 2008, they still it at a rate of 4.1 percent in 2010, compared with 3.5 percent of consumers.

Only one in 700 identity thieves ever get caught. Relative to other crimes, identity theft is a low risk and high reward crime. Many identity thieves have turned their attention to small businesses since small business identity theft offers even higher rewards. Philip J. Bland, Javelin’s marketing director states that, “Overall there’s about $8 billion lost in this particular small business market.

The problem is so big the National Association of Secretaries of State formed a Business Identity Theft Task Force to deal with this issue. They recently met in Atlanta, Georgia to discuss small business identity theft prevention strategies and explore safeguards for state business filing systems.

Identity thieves and cybercriminals have moved from larger businesses to small businesses because they don’t have the sophisticated computer network protections, or ability to monitor for criminal activity like larger businesses and corporations. They know small businesses aren’t as aware of the problem or willing to proactively protect their information like larger businesses because the of the added expense.

At risk are their bank accounts, credit card information, and customer and employee information.

Small businesses must take proactive steps to protect against identity theft or risk going out of business from just one incident. They can’t wait or count on government agencies to guard against small business identity theft.

To prevent identity theft, businesses of every size must monitor their bank accounts and credit cards on a daily basis, monitor their Duns File and credit reports looking for unusual activity, and check their state business registration for unauthorized changes.

It is an unfortunate fact; you can’t stop or prevent identity theft. All you can do is catch the breach as quickly as possible and limit the impact on your business. Proactive monitoring efforts now could save your business in the future.