Professional identity theft: what to watch out for

According to a report by the Office of Inspector General entitled Key Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2022. That means more than a million business owners believe their business identity was used to apply for COVID relief loans administered by the Small Business Administration.

I am one of those victims. Here’s what happened to me, and the steps your business can take to protect itself.

I learned of the fraudulent application because my personal credit report from Experian which I monitor via Nav listed an application for “SBA ODA”, but I never applied for an SBA loan.

I’ve written extensively about the Economic Disaster Loan (EIDL) program since it launched a nationwide loan and grant program to help businesses affected by the coronavirus in March 2020. So when I spotted the survey that mentioned SBA APD, I knew the acronym stood for SBA Office of Disaster Assistance, and I also knew it meant that someone had probably requested an EIDL using my identity.

This isn’t my first entanglement with identity thieves. A few years ago someone opened a credit card in my name and placed a large order for sneakers. Then, in the spring of 2020, I found out that scammers were using my name again to claim stimulus credits and benefits.

A request from a major credit card issuer appeared on my credit report. I hadn’t applied for credit recently, so I called the issuer. They explained that there was a pending request for a credit card, but it had not yet been issued. I told them it was fraudulent.

Then a request from another financial institution appeared on my credit report. This time I learned that the potential scammers had opened a bank account in my name. Weeks later I found out that they had successfully applied for unemployment using my information, even though I was employed full time at Nav. Fortunately, the bank froze the check deposited by my national unemployment agency before they could cash it. (A second bank account was opened in my name but I was able to quickly close it before any activity.)

I already had a fraud alert on my credit reports, but I renewed it and visited my local sheriff’s office to file a police report, hoping that was the end of it. But then the SBA investigation showed up on my credit report.

Unlike the other times I was able to call the financial institutions in question, I was unable to find a way to speak with anyone from the Small Business Administration to alert them or find out what was going on. And since SBA EIDL loans don’t show up on personal or business credit reports, I have no way of knowing if there’s an outstanding SBA loan with my name attached to it. (SBA EIDL loans over $25,000 result in a UCC-1 deposit that would show up on my business credit reports, but so far I haven’t seen any on my credit reports.)

I am in the process of filing an identity theft report with the SBA. Ironically, the only option they offer to do so is to email them a form with personal information and a copy of my ID; not exactly what I consider to be the most secure method of communication.

Identity theft is a growing problem facing business owners. According to a report by the National Cybersecurity Society (NCSS), corporate identity theft appears to be on the rise. And KrebsonSecurity reported an alarming increase in identity theft in small businesses. Targets can even include businesses that have closed!

Detecting or stopping identity theft can be difficult, especially for small businesses that may not be on the lookout for the warning signs. But here are some strategies to consider:

  1. Check and monitor your staff and corporate credit reports. Suspicious activity, including inquiries or new accounts you don’t recognize, can be a sign of fraud. Since the credit bureaus do not share information with each other except in very limited situations, you will want to check and monitor your credit with each of the major consumer credit reporting agencies – Equifax, Experian and TransUnion – and with commercial credit agencies such as Dun & Bradstreet, Equifax and Experian. (Here are over 138 places to get your free credit scores.)
  2. Beware of phishing scams such as emails or phone calls that attempt to trick you into revealing sensitive information. Check the links to make sure they are safe (padlock in the URL) and match the site you think you are visiting. Better yet, connect to accounts directly from the financial institution’s app or website.
  3. Verify and maintain state business documents. Obtaining a business license and registering a legal entity or a fictitious name (“DBA”) are steps that new business owners must take to set up their business. Unfortunately, in some states it is easy for scammers to verify online registrations and then alter them. An address change that you haven’t initiated is a huge red flag that something is wrong.
  4. Act quickly if you notice suspicious activity. Place a fraud alert or credit freeze on your personal credit. (Unfortunately, you can’t freeze business credit, although Experian allows you to add a fraud alert to your business credit report.) File a police report. And keep good records; you may find like me that you will need it later. Visit the Identity Theft Resource Center for helpful information on what to do if you are a victim of identity theft.

Identity theft drains time and resources; both that business owners often find scarce. While you may not be able to stop everything, taking proactive steps to help protect your personal and professional identity can save you valuable time in the long run.

This article was originally written on February 24, 2022.

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