The massive Equifax data breach exposed personal information of millions of consumers, and small business owners may be doubly concerned.
After all, it’s not just their personal information that’s at risk. A data breach like this can also put their business at risk. For many small business owners, personal and business credit is intertwined in a variety of ways, from small business financing to vendor relationships.
A class action lawsuit has been filed on behalf of small business owners concerned about the impact of the Equifax breach on their businesses. In a news release about the lawsuit, attorney Jason Doss said: “This is a real double whammy situation for small business owners whose access to credit can often live or die in terms of their personal creditworthiness. The breach could either damage the business directly through identify (sic) theft or it could cripple access to small business credit by damaging the ‘linked’ credit of the individual who owns the enterprise.”
Here are five important considerations for small business owners.
1. Your business is at risk of identity theft too.
Businesses can be targets of identity theft, just as individuals are. Using a combination of personal information about the owner and publicly available information about the business, crooks can open new accounts in the name of the business, purchase items on credit, and then sell them for a profit. They can open up loans or lines of credit, giving them access to cash they will pocket. The business owner may be oblivious to this activity until significant damage is done. After all, few business owners are checking or monitoring their credit. Don’t just focus on personal identity theft after this breach: you must also protect your business from ID theft.
2. You can’t freeze your business credit reports.
There’s been a significant spike in the number of consumers placing security freezes on their personal credit reports in the hope of avoiding identity theft. There is currently no option to freeze business credit reports. In fact, unlike personal credit, no federal law restricts access to business credit reports, as it does with personal ones. Vendors, lenders, business partners and even competitors can review your business credit reports. In addition, businesses do not get a free annual credit report as required by law in the case of personal reports. (Currently, Nav offers the only way to check and monitor business credit for free; those reports include Dun & Bradstreet and Experian, but not Equifax.)
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3. Your business may be a target of cybercriminals.
Many businesses think they are too small to be on the radar of criminals trying to steal customer information. Think again: businesses of all sizes are at risk. A Hartford survey, for example, found that 85% of small businesses did not think they were at risk of a data breach. (Hopefully awareness has risen since that survey was conducted in 2012.) For a small firm, a cyber attack or data breach could create headaches from which the business never recovers.
In Equifax’s case, the breach occurred after a computer software security patch was not installed. You’ll want to make sure your business regularly updates your computer systems and has systems in place to check for vulnerabilities; that’s even more urgent if you collect sensitive customer data. However, data breaches are just example of the risks small firms face. It’s a stark reminder that you need a cyber security policy and perhaps even insurance in case your firm becomes a victim.
4. Personal identity theft can affect your business.
Many times individuals find out about identity theft after something negative happens; for example, they are turned down for a loan or sued by a debt collector over a debt they didn’t know existed. Entrepreneurs who are busy trying to run their businesses may be so focused on work that they don’t notice the warning signs. They can find themselves turned down for financing or have credit lines closed due to negative information on their credit files.
It’s worth asking yourself: what would you do if you became a victim? At a minimum, consider monitoring your personal credit reports and scores on a regular basis so you can spot unusual activity quickly. You may also want to make sure you have identity theft insurance, which should include resolution services to help to resolve the problem, should the worst case scenario occur.
5. Your business may see an increase in fraudulent transactions.
Crooks may use the information stolen in the Equifax breach (and other data breaches) in a variety of ways that could target your business. You could see an increase in fraudulent transactions from accounts opened by id thieves. There may be an increase in case of “synthetic” id theft, where legitimate information is mixed with fraudulent information to create an entirely new identity. Or your employees could be targeted by “phishing” or “spear phishing” campaigns aimed at tricking them into revealing sensitive information. Some scammers will sit on stolen information for a year or more, waiting for prospective victims to let their guards down.
It’s too early yet to know the full extent of the fallout of this data breach, but it’s certainly not the first or the last one. Business owners need to understand that protecting and monitoring their credit data, as well as protecting the personal information of their customers, is more crucial now than ever.
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