How Your Business Can Cut Down on Identity Fraud


Last month, IT Business Edge reported on the guilty pleas by several men who committed identity theft. Unfortunately, the men are part of a growing trend. Javelin Strategy and Research released its 2010 Identity Fraud Survey Report, which found that the number of identity fraud victims increased by 12 percent (11.1 million adults) in 2009, while the dollar amount of fraud increased by 12.5 percent (reaching $54 billion).


While the survey focused on consumer identity issues, the report also looked at the enterprise side. For example:


Small business owners suffered identity fraud at one-and-a-half times the rate of other adults. This appears to be due to the fact that small office / home office business owners use personal accounts when making business transactions and make more transactions than typical adults.


There is a link between consumer identity theft and companies. Michael Stanfield, CEO of Intersections, a consumer and corporate identity risk management service, told me that one of the problem he sees is that businesses, in general, are not doing a good job in telling consumers how they can better protect themselves, as well as helping the customers protect themselves. He said:


Businesses need to help consumers help the business. What has happened is an increase in computer-driven theft of passwords, computer names, challenge questions -- all the information one needs to crack into a business. Consumers don't know it is happening and don't have the tools to prevent it from happening. Businesses need to educate and provide resources to protect the consumer, so the customer can conduct business without risk.


Why is it important for businesses to do their part to lower identity fraud of consumers? Anne Wallace, head of Identity Theft Assistance Corporation, told me:


Although the survey focused on financial services companies, I think there is a message there for any kind of business. Consumers react against companies where they have experienced fraud. The survey showed that a significant number of customers changed credit card companies and financial institutions after they experience fraud. I'd assume consumers will have a similar adverse reaction against other companies where they experience fraud.