Modern companies generate and handle large volumes of customer data. This data explosion has led to serious security risks that companies need to manage. Identity threads are one of the main security dangers in this situation. Identity theft affects individuals, businesses, public institutions, and financial agencies.
Understanding identity theft, recognizing its various forms, and implementing preventative measures are essential steps in making your business more secure and less vulnerable to fraud.
Let’s define identity theft, examine its types, and learn what can be done to strengthen your company’s security against fraud.
What Is Identity Theft?
Identity theft is the illegal use of another person’s financial or personal details like their name, Social Security Number, or credit card information usually to gain money. Therefore identity thieves pretend to be someone for their own benefit while dealing with organizations.
Identity theft impacts the people whose identities are stolen and the organizations affected by these activities. As it’s difficult to detect identity theft in its early stages, the consequences of this crime can be far-reaching and challenging.
Types of Identity Theft
Scammers are always coming up with clever ways to commit identity theft. Let’s review some common types of identity theft:
Financial
This occurs when someone steals your financial details like credit card number or bank account information to make purchases, withdraw money, or commit financial fraud.
Medical
Scammers gain access to your medical information through medical data leaks, phishing emails, calls, messages, or improperly discarded medical documents. Then, they use the stolen ID data to obtain medical services or expensive treatments.
As a result, medical ID theft victims may find unfamiliar medical records or even incur unexpected medical bills.
Child
Child identity theft occurs when a child’s Social Security Number is stolen and used to apply for credit cards, loans, or government benefits.
Since children don’t check their credit, these activities can go unnoticed for years, causing significant damage by the time they are discovered. Monitoring these fraudulent activities typically falls on the parents, who may not realize the threat, making child ID theft particularly attractive to criminals.
Social Security
This type of identity theft involves stealing a Social Security Number (SSN) to commit any kind of fraud. Scammers can open bank accounts, apply for loans and social security benefits.
Synthetic
A case, when scammers create a fake ID by combining real and fake personal information is called synthetic identity theft. Scammers use stolen identities to gain financial advantage. They open bank accounts or apply for loans.
In most cases, synthetic identity theft stays undetected for a long period of time as it combines both fake and real data.
Tax
This is a method to use stolen personal information to get a tax refund. Typically, scammers claim a refund before a real person files his actual tax return. As a result, the tax return has been already filed and a real individual is unable to receive his tax return.
Criminal
Criminals use stolen personal information to hide criminal activities. This is a case of criminal identity theft. Criminals can provide stolen ID or driver’s license if they’re caught committing a crime, leaving you to deal with legal troubles.
Employment
In this form of theft, a scammer uses fake or stolen personal information to get employed. This is often done to bypass background checks, avoid paying taxes, or work illegally.
Business
Thieves assume the identity of a legitimate company to commit fraud, typically by using the company’s name, tax identification number, or other sensitive information. This can result in financial loss, damaged reputation, and legal issues for the business.
Identity Theft Prevention for Businesses
ID theft is still a major security concern for many businesses. Thus, organizations need to develop and implement documented identity theft prevention programs. These programs outline red flags and warning indicators that staff members should be aware of when going about their daily business.
In addition, other international laws minimize security risks related to fraud and ID theft. Here are some that are worth checking:
- International Civil Aviation Organization (ICAO) standards
- General Data Protection Regulation (GDPR)
- Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations
- Know Your Customer (KYC) regulations
- Electronic Identification, Authentication, and Trust Services (eIDAS) regulation
- Financial Action Task Force (FATF) Recommendations
- Payment Card Industry Data Security Standard (PCI DSS)
- Consumer Privacy Acts
- Electronic Signatures in Global and National Commerce Act (ESIGN), etc.
These guidelines emphasize that identity verification is crucial to building trust between a business and its customers. Taking proactive steps is essential to protecting your company from fraud and ID theft.
Key measures to strengthen against fraud and stop identity theft:
- Strengthen Identity Verification: Use multi-factor authentication and other secure methods to verify customer identities before granting access to sensitive data or accounts.
- Update Security Measures Regularly: Continuously review and enhance security protocols to stay ahead of emerging threats and ensure the reliability of your verification processes.
- Train Employees: Make sure all staff members can recognize and respond to identity theft attempts through regular training.
- Use Advanced Fraud Detection Tools: Provide the company with the newest fraud detection tools to identify suspicious activity in time and prevent it. Use the most recent fraud detection technologies to quickly identify suspicious activities in real-time and take the necessary action.
- Protect Client Data: Save client details by using encryption, limiting access, and properly disposing of sensitive information to protect client details.
- Communicate with Clients: Keep clients informed on how to protect their identities and encourage them to report any suspicious activity.
Since identity theft remains one of the most critical security threats for businesses, it’s crucial to implement a comprehensive ID theft protection policy.
This ought to involve following industry rules, creating stringent security and data access guidelines, and improving all financial and data-related procedures in terms of due diligence. By implementing these procedures, your business may greatly strengthen its defenses against identity theft and lower the risk of fraud.
