Identity Theft and Small Business
For most consumers, an identity theft can be a very troublesome incident that could potentially cost thousands of dollars in repairing the damage. If the crime is caught in time though, most can go back to their daily routine with little effect and no money lost. However, it’s often a very different story for a small business, where an identity theft can be outright catastrophic, eventually leading to the business’s demise. Criminals are well aware of this too, they know many small businesses are family owned and don’t stay up to date with security measures, putting the proverbial target on their backs.
Why is identity theft so much more dangerous for a small business? Partially because there’s simply more at stake, a small business owner could lose their entire livelihood and put dozens of people out of work. Also, many small businesses have a very hard time recovering from an identity theft, particularly if they suffer significant financial losses. Most small businesses rely on large loans to get them off the ground - the average loan is about $300,000. Should this money be stolen in an identity theft, the results are often disastrous. Even with the legal protections and limitations on liability for fraudulent debt, it could take several months or even years to fully recover losses. With many small businesses fairly unstable to begin with, the long wait between an identity theft and eventually recovering the losses could put the company in a hole it just can’t climb out of. What’s worse, most banks or lenders will conduct an investigation regarding the identity theft and may be able to force the business to pay back the loans if their security practices are deemed inadequate or insecure. As you can see, there’s a lot at stake for small business owners when it comes to identity theft. Here’s an outline of the major problems that could arise as a result of a business identity theft.
Possible Fallout from a Business Identity Theft
- Declining sales
- Smaller profits or negative earnings
- Customer and investor dissatisfaction
- Loss of customer base
- Employee layoffs
- Business bankruptcy
- Failure and loss of entire business
