Stay protected against identity fraud

Prevention is better than cure

Identity fraud is a growing threat to the business community, driven in recent years by the increased prevalence of online technologies and electronic storage of data. In particular, small businesses with reduced security measures are susceptible to identity theft, which can result in significant financial and emotional losses.

More often than not, the misuse of false or stolen identities can allow fraudsters to trade off the back of the real company's good name to obtain goods on credit from suppliers, according to the Stop ID Fraud  government initiative website. Moreover, criminals who have stolen or forged signatures can attempt to withdraw from business bank accounts.

As part of the National Identity Fraud Week (8-14 October 2012), D&B has developed a two-part guide on combating identity theft, to assist businesses in safeguarding themselves as well as taking action against fraud that has already occurred. Below, Part One provides information on how businesses can protect themselves against becoming a victim of identity theft.

Verify identities

You should always check and verify the identities of your customers and suppliers  - whether they are other businesses or consumers - to confirm they are who they say they are. In some cases, investigating the background of potential employees is also a good practice.

Consider investing in a identity verification software such as D&B's Identi-Check, which electronically confirms identities in real-time against a range of databases. The Attorney-General has also developed a National Document Verification Service  (NDVS) to check whether a particular proof-of-identity document is authentic and up-to-date. The NDVS is currently only available for government agencies but will be rolled out to the private sector from December 2012.

Review financial statements regularly

Good bookkeeping practices  dictate that businesses should review financial statements on a monthly basis, not only for budgeting and tax purposes but also for the sake of fraud prevention. Regularly checking your financial statements - such as corporate credit card and banking statements - can help in detecting suspicious charges or withdrawals.
Dispose of information safely

When you throw something away, there is always a chance that someone will pick it up and read it, and may even use that information for illegal purposes. Ensure that you dispose of sensitive documents (anything with personal information on them) properly by shredding them. Any other documents that you still want to keep should be stored in a safe place and locked, or digitised and password-protected. Only provide access to these documents to relevant employees.

Change passwords

One of the biggest risks facing SMEs is failing to change passwords on a regular basis, or storing passwords in publicly-accessible places. It's a good idea to install software that prompts users to change their password every few weeks, and avoid using common passwords such as the company name, date of birth, or simply '1234567'. Employees should also refrain from writing passwords down on post-its or storing them in unlocked drawers.

Amp up data security

Installing and maintaining firewalls and anti-virus software is the first line of computer security. Don't wait for a security breach to occur before you review or update your IT systems - prevention is always better than cure. Read more on data security pitfalls here.

If you take these preventative measures on board and ensure that all staff members have an understanding of identity theft risks, the chances of your business experiencing this type of fraud can be significantly reduced.

Look out for Part Two tomorrow on combating identity fraud after it has occurred.

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