Identity theft targeting small businesses costs $8 billion annually — and the problem is expected to get worse, thanks to recent security breaches.
That’s the word from Philip Blank, senior security analyst at Javelin Strategy & Research and author of a new report about small business identity fraud.
The report found that small businesses face a 15 percent higher rate of identity fraud than consumers and that identity theft costs small businesses more than double what it costs the general public. “There is a lot more money at stake than had been previously thought,” says Blank in the report.
Out of $8 billion lost, about $5.5 billion was absorbed by banks, insurance companies and other providers. The balance — about $2.5 billion — was passed on to victims. Businesses which were victims of card fraud were more likely to find the source of fraud being credit cards (64 percent) rather than debit cards (27 percent), the survey found.
There was at least one ray of light: The fraud rate for businesses in 2010 actually dropped significantly from 2009 (from 7.4 percent to 4.1 percent).
However, cautions Blank, recent large security breaches — such as the Epsilon and Sony Playstation breaches — mean identity fraudsters are armed with new customer data they can use to launch more attacks. Businesses “better watch out for next year,” he warns. Small businesses are considered especially vulnerable because they typically lack full-time IT departments and thus may not be as vigilant against security breaches, the Javelin report notes.
So what can you do to protect your business from being hit by identity fraudsters? Blank says there are some relatively easy measures you can take now, including setting checking accounts and debit/credit cards up so that every time a transaction goes through, you get a real-time alert. Antivirus and antimalware software are also key. You might also consider an identity fraud protection plan, which includes purchasing loss insurance.