Businesses and their employees invest countless hours building their professional reputations, cultivating client relationships, and establishing trusted market positions. Yet, in mere moments, cybercriminals can hijack these carefully crafted identities and wreak havoc that can take years to repair.
This growing threat, known as business identity theft, has become increasingly sophisticated and common as companies expand their digital footprint. Let’s explore how identity theft affects your business and, more importantly, how you can protect against it.
Business Identity Theft Can Have Many Faces
The scale of business identity theft has reached alarming proportions in recent years. According to a 2023 global survey by Trulioo, a staggering 79% of organizations have fallen victim to business identity theft schemes involving fraud, extortion, or monetary theft. Even more concerning, research from Regula Forensics reveals that 95% of enterprises and 90% of small businesses dealt with some form of identity fraud in the past year alone.
These troubling statistics stem largely from the fact that cybercriminals have developed numerous methods to exploit business identities:
- Employee identity theft: The impersonation of employees serves two primary purposes. First, criminals use it to conduct sophisticated social engineering attacks. Second, they may exploit the stolen identities directly to damage personal and professional reputations.
- Executive impersonation: Criminals pose as company executives or key decision-makers and may create convincing email accounts or social media profiles to trick employees, vendors, or financial institutions into transferring funds or sharing sensitive information. This type of fraud often succeeds because staff are reluctant to question requests that appear to come from senior leadership. What’s more, cybercriminals can now use deepfake technology to create artificial voices, pictures, and more.
- Financial identity theft: This type of identity theft involves criminals hijacking a business’s identity through fraudulent filings to open new lines of credit, loans, or credit cards. They exploit the company’s creditworthiness and financial history to secure funds, often maxing out credit lines before the business discovers the theft. Fraudsters may also file fake Uniform Commercial Code (UCC) financial statements to further their schemes.
- Tax identity theft: Using stolen business information, particularly federal employer identification numbers (EINs), cybercriminals file fraudulent tax returns and claim refunds. They may also use these stolen credentials to apply for government benefits or relief programs, leaving the legitimate business to deal with tax implications and legal complications.
- Website and digital platform identity theft: At the heart of this attack is the creation of duplicate websites or social media profiles that mirror legitimate businesses. Cybercriminals use these fake platforms to redirect customer traffic, steal sensitive data, or damage the company’s reputation. Fraudsters often go as far as to register similar domain names and create entire shadow operations.
- Supply chain identity theft: This sophisticated form of identity fraud involves criminals posing as legitimate vendors or suppliers. They may use stolen business identities to place or redirect orders, potentially disrupting entire supply chains and causing significant financial losses.
As varied as these types of business identity theft are, their consequences are often similar.
The True Cost of Business Identity Theft
When identity thieves successfully target a business, the impact cascades through every aspect of the organization, creating both immediate and long-term consequences.
Perhaps the most obvious is the financial mayhem that often follows. According to Javelin Strategy & Research, identity fraud cost US businesses an estimated $56 billion in 2021. The financial losses associated with business identity theft stem from fraudulent transactions, emergency response costs, and legal fees, often compounded by increased insurance premiums that follow such incidents.
Beyond immediate monetary losses, businesses face severe operational disruptions. When identity theft is discovered, companies must divert significant resources to investigation and recovery efforts. In fact, 44% of organizations identified business disruption as their primary concern following identity theft incidents. This disruption isn’t limited to the IT department as it affects everything from daily operations to long-term strategic initiatives.
However, arguably the most devastating is the reputational damage that follows a business identity theft incident. Take the case of Jack Dorsey, former Twitter CEO, who fell victim to identity theft when criminals hacked his social media account and posted offensive content in his name. Despite Dorsey not being personally responsible, Twitter’s reputation suffered as the incident raised serious questions about the platform’s security measures and leadership.
Last but not least, identity theft can also significantly impact established business relationships. When identity thieves successfully impersonate a business, they erode the trust that forms the foundation of vital partnerships. This erosion of trust leads many organizations to completely reevaluate their business relationships, creating ripple effects throughout entire industry networks.
While these costs are severe, they aren’t inevitable. Modern security measures, when properly implemented, can significantly reduce the risk of business identity theft.
Fortifying Your Business Against Identity Theft
The key to protecting a business against identity theft is the implementation of a comprehensive defense system that addresses both human and technical elements while ensuring your business can respond quickly if an attack occurs.
Employee Education
Your employees represent both your greatest asset and potentially your biggest vulnerability in the fight against identity theft. Creating a culture of security awareness begins with comprehensive training programs that immerse employees in real-world scenarios they might encounter to help them understand how sophisticated modern identity theft attempts can be.
Security awareness training must focus particularly on identifying and responding to phishing attempts, which continue to grow more sophisticated. Employees need to understand that modern phishing attacks often use deep research about your organization and are increasingly supported by artificial intelligence tools that make it possible even for non-native fraudsters to
Technical Safeguards
The technical component of identity theft protection requires a multi-layered approach using modern security solutions. For example, Microsoft 365 Business Premium provides a comprehensive security framework that addresses multiple vulnerability points by:
- Delivering enterprise-grade endpoint security across your entire device ecosystem—from Windows and macOS computers to Android and iOS mobile devices.
- Providing multi-layered protection against a wide range of email-based threats, including advanced phishing attempts, malicious attachments, and zero-day threats.
- Offering advanced multi-factor authentication as an extra layer of identity verification beyond traditional passwords to significantly reduce the risk of unauthorized access even if credentials are stolen.
- Including Microsoft Intune, which enables you to implement robust security policies across both company-owned and employee devices.
- Making it possible to discover, classify, and protect sensitive information across your organization using Microsoft Purview.
With these integrated security features, small and medium-sized businesses can implement enterprise-grade protection without the complexity and cost of managing multiple separate security solutions.
Business Process Controls
Systematic controls form the backbone of any effective identity theft prevention strategy. You can start by establishing a regular schedule for monitoring your business credit reports. Don’t limit yourself to annual reviews—monthly monitoring through major agencies like Dun & Bradstreet, Equifax, and Experian helps catch suspicious activities early.
Another important layer of protection are real-time alerts for financial accounts. It’s a good idea to configure alerts for all business accounts to notify appropriate personnel of unusual activities, such as large transactions, international transfers, or new payee additions.
All significant financial transactions, especially those initiated through digital channels, should be verified through a separate communication channel from the original request. For example, if someone sends a wire transfer request via email, the verification must occur through a phone call to a pre-established number or an in-person confirmation. While potentially time-consuming, this business process has repeatedly proven to be one of the most effective safeguards against financial fraud and identity theft.
Conclusion
Business identity theft is a tricky and ever-changing problem that demands ongoing attention and a solid defense plan. It’s not easy, but doing nothing could cost you a lot more than setting up proper safeguards. By educating your staff, using strong security measures, and setting up strict business protocols, you can greatly lower the chances of your company falling victim to identity theft.
At OSIbeyond, we can assist you in developing a thorough security strategy that keeps your business identity safe without hampering your daily operations. Schedule a consultation with OSIbeyond today.