Preventing Corporate Identity Fraud
“Small businesses are potentially vulnerable to corporate identity fraud as they often don’t have the systems in place to protect themselves or the resources to draw on if they do become a victim. With identity theft continuing to be a problem, it is essential for SMEs to recognise the potential threat and take steps to ensure their business is protected. If they do suspect they have become a victim they should inform their bank or local police.”
- Danny Harrison, CPP Identity Fraud Expert.
Within the last year, 15,000 businesses claim to have fallen victim to corporate identity fraud – showing a small rise in this crime. Within this article, the most common form of corporate identity fraud is explained – and ways of preventing it.
SMEs are susceptible to fraud through criminals taking advantage of a small loophole within Companies House. Fraudsters can change the address of any business by submitting a false AD01 address, so they can apply for a company credit card or order fraudulent goods on the company account. This can be done without anyone noticing due to Companies House not alerting the company director or secretary that there has been a change of address. SMEs believe that corporate identity fraud is normally committed by previous employees of the business, working directly – or through an associate of theirs.
The majority (68 per cent) of SMEs are unfortunately unaware of this loophole, mistakenly believing that Companies House checks and verifies the details of documents filed with them. A recent survey of two hundred small and medium SMEs revealed that, through a combination of ignorance and lack of information given to them, 87 per cent did not have the adequate insurance in place – leaving them at risk from corporate identity fraud.
Protecting your Business from Identity Fraud
Companies House does offer some basic protection in the form of the ‘Protected Online Filing System’ (PROOF) scheme. The added security which PROOF provides is a way to stop the fraudulent change of the registered office address and change of director or company secretary, helping to reduce the risk of corporate identity fraud. However, there are other precautions which can be taken to protect your business against fraud.
CPP’s top tips on protecting companies from corporate identify fraud:
- Limit access to company sensitive information to only key employees
- Make sure all company sensitive information is securely stored and only transferred using passwords and encryption in case it is lost or delivered to the wrong recipient
- Ensure that company staff are not able to remove sensitive documents from the office
- At Companies House file information online (WebFiling), submit all papers online (PROOF) and subscribe to an alert system that notifies companies when changes to their details are made (Monitor). More information about these services and combating identity fraud can be found at http://www.companieshouse.gov.uk
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