Whether your business has a staff of 2 or 200, protecting the business from any kind of fraud, including identity theft, requires a team effort. For businesses that have databases with personal identifiers such as names, addresses, social security numbers and dates of birth, the security of that data poses a special risk to both the consumers and the business. Management of the company must lead, and, where necessary, enforce policies to protect that data from employee theft or negligent disclosure.
Commissions: Another threat to a business arises from the conflicts of interest created by employee commission policies. Commissions are a powerful incentive to a salesperson to increase the bottom line of the company. They are a useful, powerful tool in a sales organization. However, without adequate training and supervision, in their pursuit of commissions employees may make deals that place the company at risk, e.g., failure to verify the identity of the customer. The auto dealer case discussed in Part Two illustrates this: C&F Finance Co. v. Lowe, No. CL13-1512, (Richmond Cir. Ct. Nov. 6, 2013). In real estate, the effect of sub-prime mortgage originations on the health of banking corporations (and the U.S. economy as a whole) is a good example of these dangers.
Any business program safeguarding against identity fraud must be oriented around the best interests of the business’s constituents, i.e., its owners and clients. The strategy must consider company data and property that are desirable targets for fraud and enable the technology and personnel of the company to protect against the threat.
Monitor Changes: Managers of the business can monitor for signs of identity fraud without an overly burdensome time commitment. Monitor your company’s credit reports, state corporation commission filings, land records filings, credit card statements, invoices, and employee files. Credit card companies can help the card holder with fraudulent charges only if monthly statements are first carefully reviewed and investigated internally by the business. Renewals of insurance policies are a good opportunity to discuss with the broker which identity fraud threats are covered by existing policies and which may be available for expanded coverage.
Small and rapidly growing companies are vulnerable to identity fraud at the hands of their employees, customers, vendors and experienced criminals. A well-developed and implemented plan for protecting against identity fraud is an investment of time that provides a return in the form of an atmosphere of security, and fewer distractions from building the business. Such a plan requires careful consideration of the federal and state laws pertaining to identify theft in order to be effective.
This Post is the final (for now) installment in a three part series on identity theft.
photo credit: _Dinkel_ via photopin cc
Attorney protecting the rights of Virginia & D.C. property owners. Cowherd PLC (703) 884-2894
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