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Identity Crisis

Make no mistake--business identity theft can happen to you if you're not careful.

This story appears in the April 2003 issue of Entrepreneur. Subscribe »

Personal identity theft is all too common. But what do you do when your business information is stolen and someone charges purchases to your accounts and ruins your business credit history? An estimated 52,400 businesses were affected by ID theft as of June 2002, an increase of 74.8 percent since January 2001, according to the FTC. John R. Vacca, author of Identity Theft (Prentice Hall), suggests a multipronged approach to prevention. Limit the employees who have access to sensitive information, screen outsourcing companies thoroughly, and always encrypt sensitive data on your computer network.

Because one form of business ID theft happens when others forge payroll checks against your business accounts, Johnny R. May, author of The Guide to Identity Theft Prevention (1st Books Library), recommends guarding check stock like cash. Don't use preprinted check stock; instead, encourage direct deposit, and shred sensitive documents on a regular basis. "The more paper you have, the more your company is at risk for fraud," says May. Keep two accounts, one for transactions and one for large sums of money from which only you have the authority to withdraw. That way, anyone who gets into your transaction account can't clean you out completely.

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