Javascript is currently disabled. This site requires Javascript to function correctly. Please enable Javascript in your browser!

Use of Owner Identity

Use of Owner Identity | Business Identity Theft

Use of the Business Owner and Officers' Identities for Fraud

Business identity thieves often use the business owner and officers' information in their scams

Business%20ID%20theft%20schemes%20often%20involve%20misuse%20of%20the%20identities%20of%20business%20owners%20and%20officers%2C%20which%20creates%20serious%20problems%20for%20the%20business%20and%20owners. Bookmark and Share

Use of business owner identity

It is certainly no secret that the identities of the business owner, officers, directors, or key executives are closely intertwined with their business - whether from a credit or financial standpoint, or in regards to operational and decision-making authority for the company. Because of this, many cases of business identity theft also involve the misuse of the identities of these individuals. 

Some of the common ways that thieves may obtain this information include, but are not limited to:

Regardless of how their personal identity information is ultimately obtained, the misuse of that information by business identity thieves can further compound the problems for both the business and the business owner or officer, as you will see below.  Also see Business Owner Risks  

 

Common ways that business identity thieves use the identity of the business owners or officers for fraud

 

Business identity theft warningObtain business loans or lines of credit using the owner, officer, or key executive as a guarantor

Many types of business accounts require a personal guaranty from one or more of the business owners. Some examples include credit cards, bank accounts, merchant processing accounts; and, of course, business loans and lines of credit.

Fraudulent loan guarantyFor example, all SBA loans require personal guaranties from every owner of 20 percent or more of the business, as well as from other individuals who hold key management positions. Whether or not a personal guaranty will also be secured by personal assets is based on the value of any assets (business or personal) already pledged, and the value of the assets personally owned compared to the amount borrowed.1

With enough information, not only may the thieves use the business owner or officer's identity to secure a fraudulent loan or line of credit, but they may fraudulently pledge the business assets, or even the personal assets of the owner or officer, in the process.

 

Business identity theft warningOpen or access existing bank or credit accounts
(personal or business)

Armed with the owner, officer, of key executive's personal information, business identity thieves may attempt to access the business' existing cash and credit accounts for fraudulent withdrawals, purchases, transfers, or cash advances. They may also attempt to open new bank and credit accounts, completely under their control, and use these accounts in fraud schemes to purchase goods or services. The accounts may be opened in the business' name, with the business owner or officer listed as the guarantor for the accounts; or, opened as personal accounts in the name of the owner or officer - or both. Either way, once the thieves have exhausted all available credit or are unable to continue to use the accounts, they quickly disappear and leave the creditors, banks, business, and business owners to try and determine what happened and unravel the mess.

Because the business owner or officer were used as the owners or guarantors of the accounts, defrauded creditors and lenders will attempt to collect from them personally. The accounts will also most likely be negatively reported against them to the credit reporting agencies, check verification and deposit account services, and possibly even pursued through legal action while the owner or officer attempts to dispute and resolve the matters. While this is occurring, negative credit reporting and collections activity may cause the owner or officer to suffer an increase in interest rates, or decreases in credit lines, on his or her personal accounts; or an inability to open new accounts, obtain business or personal financing, or write checks. It can all be eventually resolved and corrected, but even in the short term any of these can have a significant negative impact on both the business and the owner or officer.

 

Business identity theft warningImpersonate the owner of officer in order to conduct significant transactions in the business' name

Impersonating the business owner or a key officer can potentially allow thieves to convince third parties they have the authority to initiate significant transactions in the business' name, such as the sale of business assets - or even sell the business itself.

Yes, it can and does happen. For example:

Krawczyk, a business consultant and public speaker, said he recently did a routine check of his corporate filing with the Nevada Secretary of State’s office, and learned that the company no longer existed. The name, corporate officers and resident agent had been changed. Krawczyk has filed suit alleging that another company fraudulently changed his corporate information and sold his business for $10,000.2

In another case, a small business owner received a phone call about an unpaid electricity bill for one of his office buildings. The owner discovered he never received the bill because the building had been sold without his knowledge. A fraudster had falsified the company minutes, made himself the new CEO, and sold the building to an accomplice - walking off with the proceeds of the sale.3

In both cases, the victims were eventually able to reverse the transactions and recover their assets. But if such a thing happened to your business, even if only temporary, what kind of an impact could it have?

 

Learn how to protect your business from business identity theft

Need help? Find resources and assistance





Popular in Business ID Theft Schemes:
Other Popular Content:

 

Business Owner RisksPersonal Risks for Business Owners
Business identity theft poses increased personal risks that can turn your business dream into a nightmare.

 

Personal credit protectionPersonal Credit Protection
7 essential tools to protect your personal credit

 

Business Identity Theft PreventionBusiness Identity Theft Prevention Guide
What you need to do to protect your business and yourself from identity thieves

 

News and AlertsNews and Alerts
The latest business identity theft articles, recent news, and alerts

Victim Checklist Business ID Theft Victim Checklist
Know what to do if you are a victim

 

State Resources
State Business Identity Theft Resources Find business ID theft resources, victim assistance information, and instructions for your state or U.S. territory

 

Federal Resources
Federal government resources U.S. Federal Government agencies and resources for identity theft and business identity theft victims

 

Forms and GuidesForms and Reports
Find forms, guides, videos, and other helpful resources

 

Professional Resources
Professional ResourcesFind professional assistance, employee training, personal and business services, and other solutions


Personal identity theft protection services may not cover your business

If you have enrolled in a personal identity theft protection program or service, read the program terms carefully. Most programs specifically exclude coverage for issues related to your business, including business identity theft and any personal issues caused by fraudulent business debts. 




Glazner owned a business in the 1980s. He dissolved it in 2009, or so he thought. Then a large retailer called him asking questions... "Gee, did you try to open up a credit account with us? And when did you move your business?"

Glazner stated "First of all, the business is closed and I didn't try to open anything with you. It turned out somebody had gone into the Colorado Secretary of State's website, reinstated the business then opened it up in another state, listing me as an officer of the company and proceeded to try to open credit accounts."

Wolf, Jeffrey."Businesses registered with Sec. State targeted for ID theft," 9News.com, October 12, 2010


 

Personal credit reportTools to Protect Your Personal Credit

Don't let business identity thieves damage your personal credit. Learn about tools and resources to protect yourself.

1 U.S. Small Business Administration, "The Application Process - Collateral," www.SBA.gov.
2 Norman, Jan. "Irvine businessman sues over corporate identity theft," Orange County Register, May 21, 2008.
3 Prashad, Sharda. "Identity theft strikes small businesses," The Globe and Mail, January 18, 2010.

Asset 1