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Best Practices

Best Practices Can Protect Against Business Identity Theft

August 28, 2014

According to the Better Business Bureau, identity theft affects more than nine million people and costs more than $56 billion to the economy every year.

However, consumers are no longer the only targets of identity thieves. Scams to steal business identities are a threat to title and settlement companies across the country and are not bound by state lines or jurisdictional constraints.

Business identity theft—also known as corporate or commercial identity theft—is a new development in the criminal enterprise of identity theft. In the case of a business, a criminal will hijack a business’s identity and use that identity to establish lines of credit with banks or retailers.

With these lines of credit, the identity thieves can make large purchases with relative ease. Criminals engaged in business identity theft sometimes utilize or register a business name or d.b.a (doing business as) that is intentionally similar to a well-established business, according to the Identity Theft Protection Association.

Through a slight variation in spelling, criminals can intentionally cause the business name to be confusingly similar to the legitimate company’s name in order to deceive creditors, financial institutions and other businesses. Some simple changes include adding, removing or abbreviating a word, or changing the entity type, the Identity Theft Protection Association said. Examples might be:

  • XYZ Title Agency vs. XYZ Title Services
  • Title Company, LLC vs. Title Company, Inc.
  • Williams & Son vs. Williams & Sons
  • Beringer Law Firm vs. Berhinger Law Firm
  • Davis Abstracting vs. Davis Abstracting & Title Company

The Danger to You and Your Business: When the similar name is used in conjunction with other real and verifiable information from the legitimate business, such as on a purchase order or in a new account application, the change is slight and easily explained. Often it may appear to simply be the result of a minor typographical error.

Either way, the order or application may be accepted. If this happens to your business, you may suddenly discover that you are receiving bills and invoices for goods and services you never ordered or received. In Florida last year, a scam targeted title companies as fraudulent entities were being established with names similar to those of licensed title insurance agents. The corporate name was modified slightly with the addition of “services,” “group” or “corporation” for example, to allow for incorporation with the state division of corporations.

Once registered, the fraudulent companies were able to obtain a federal tax identification number and open bank accounts. Criminals at the fraudulent companies then created documents purporting to be title insurance commitments, using commercially available software. Then they provided lenders with the fraudulently created insured closing service letters.

Business identity theft is another wrinkle to the many issues title companies must protect their operations against. ALTA’s “Title Insurance and Settlement Company Best Practices” provides great guidance in ensuring title professionals have the proper licensing as required to conduct business.

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