Corporate Identity Theft: Banking on Your Company's Good Credit

Many have never even heard of something called corporate identity theft. Most people think of identity theft as something that happens to careless consumers by clever thieves. You never even considered that a company had an "identity" that could be stolen.

Corporate identity theft is becoming all too common, and one of the most troubling aspects of it is how little owners, executives, attorneys and business advisors know about it. Without a basic knowledge of even the existence of corporate identity theft, people are powerless to prevent it.

The most commonly discussed form of corporate identity theft is the use of a company’s credit profile, either to fraudulently obtain credit for a separate company or to make purchases in the name of the company.

Like individuals, corporations have credit histories that are used to establish credit with vendors. It’s important for the company’s credit history to remain clean with all accounts paid currently.Without a positive credit history, a company may not be able to obtain credit from a vendor, lease new space or equipment, and may not be able to get bank financing to expand.

Identity thieves might impersonate a company in order to use the company’s good credit history to establish their own accounts. Sometimes vendors don’t carefully verify whether an applicant is really an authorized representative of a company. This makes it easy for an identity thief to set up his own company using a victim company’s credit profile.

That doesn't sound too bad, so long as the scammer pays its bills on time, and the victim company's credit rating isn't impacted. Aside from such an act being clearly dishonest, there is a risk that the fraudster won't pay the bills on time. If he was dishonest in establishing the credit, I don't expect that he'll be honest in the future when conducting business. Any default could end up on the original company’s credit report, and that's when the real trouble begins.

A second way to violate a company’s credit record is by creating accounts in the victim company’s name. This is a little more direct than just relying on the credit history to get a new account in the name of a new company. This fraud actually puts the credit accounts in the name of the victim company, leaving it even more vulnerable when the bills go unpaid.

The first step in preventing these types of schemes from harming your company is to be aware that they exist. If you know it's possible to steal your company's identity, you can take steps to guard it.

One proactive way to protect your company is by regularly monitoring your credit history. Inquire with business credit reporting agencies about your credit records. Make sure that there isn't any information associated with your company that doesn't belong to you, including addresses, authorized employees, and trade accounts.

If there is some wrong information associated with your credit records, work with the agency to have it removed. And most importantly, keep regular tabs on this information, making sure that no incorrect information has been added to your account since the last time you checked it.