Identity Theft A Growing Concern For Businesses
You've heard of identity theft — someone using a person's credit information or a Social Security number for ill-gotten gains. Well, experts say similar crimes are also affecting businesses.
Business identity theft involves posing as a legitimate business in order to get access to credit lines or steal customers. Experts believe that the practice has become more prevalent in the past two years.
Scott Burnett's family has owned and operated AAA Termite & Pest Control in Memphis, Tenn., for four decades. Last year, the Yellow Pages landed on Burnett's doorstep listing three other "AAA Pest Controls." None of the "me-too" listings were affiliated with Burnett's business.
"You would have no way of knowing you're not dealing with us," Burnett says. "And I would have no way of knowing that you've called!"
It wasn't just AAA — 103 phony pest-control businesses popped up in last year's phone book, both in print and online, appearing to double the size of the industry overnight.
"All of the locations that were advertised came out to be vacant lots or gas stations," Burnett says. "So they gave a physical address and they gave a local 901 phone number, but you would have no idea that you're not dealing with the original AAA Termite."
Burnett panicked. He imagined imposters gaining entry into people's homes, spreading poison or worse. "Every day we're all wondering: Is this the day that somebody's going to go out and do something wrong, under my name?" Burnett says.
The lookalike AAAs hung up when he called asking for a manager. Burnett hired a lawyer. But the phone company refused to divulge who listed the phony businesses. He called state investigators and the National Pest Management Association, but no one knew what to do. No one had heard of business identity theft. The only people who had were the local locksmiths, who had faced a similar problem.
"Business identity theft is incredibly underreported," says Hugh Thompson, who teaches at Columbia University and chairs an annual conference on security. No federal or state statistics track the problem. And Thompson says few victims are willing to report it.
"There's a big stigma attached with it," he says. "Imagine you're a company trying to portray an image of being solid and reliable out to your customers. It's not something that you want to readily admit to."
Business identity theft takes many forms. Posing as a look-alike or sound-alike business to lure customers is one of them. But in many cases, shady operators go after information to tap into business' credit and reputation. They change a business's contact information, for example, then use it to obtain credit cards or order goods, skipping town before bills arrive.
Thompson and others say the sophistication of these schemes suggest crime syndicates may be involved. But he says whoever is doing it is taking advantage of the fact that so much more business is done online these days.
"I think it's a big problem and a growing one because of how extended companies and governments now are online," Thompson says. "And whenever you're dealing with transactions at a distance, the big question is: How do you prove who you are to that entity?" Local governments, for example, are relying more on e-government because of budgetary constraints.
Elaine Marshall, North Carolina's secretary of state, sees an increasing number of cases involving falsified documents. She chairs a new task force on business identity theft for the National Association of Secretaries of State.
"The easiest target are dissolved corporations," Marshall says, because whoever ran those defunct businesses usually no longer pays attention.
"Somebody comes up 20 years later and reinstates it," she says. "Well, it looks like it's a 40-year-old corporation. And if it was in good standing financially when it was dissolved, then somebody's trying to capitalize on that good standing."
Burnett says he's not sure how much the fake AAA operators managed to capitalize on his good standing, because he never found out who they were.
"Privacy laws protected them," he says. "Can you believe that?"
Last week, the new Yellow Pages arrived. This time, with no imposters. But Burnett says it may be just a matter of time before they pop up again.