Phoenix Business Attorneys Advise on Identity Theft Prevention

Protecting your Arizona business in the age of e-commerce

In the digital age, businesses regularly store identifying information about themselves, their customers and other parties they deal with. This information is highly coveted by identity thieves, who can use it to defraud consumers, businesses and the government. As a business owner, you have a duty to employ robust protocols to protect that information, both from outside hackers and from employees could turn your business into a conduit for identity theft. At the Law Offices of Donald W. Hudspeth P.C. in Phoenix, our attorneys advise business leaders on protocols for securing information and preventing its misuse.

What is identity theft?

Identity theft is a type of white-collar crime that involves the use of a name, social security number, credit card number or other sensitive information to deceive a person or entity for financial gain. In Arizona, identity theft accounts for 15 percent of all fraud reported statewide. 

Identity theft facilitates a number of illegal schemes, including:

• Health insurance and Medicare/Medicaid fraud
• Mortgage fraud
• Theft of financial assets
• Auto loan fraud
• Immigration fraud
• Employment fraud
• Tax fraud and theft of tax refunds

Consumers and businesses must be vigilant to protect assets against these types of fraud. Owners of businesses that store personal identity information must guard against liability for lapses in security.

How small businesses can be victimized

Small businesses can fall prey to identity theft in several ways. Here are some common schemes:

• Unauthorized use of business credentials — Criminals may steal a business’s tax identification number, business license, or credit information to fraudulently obtain loans, credit, or goods2.
• Phishing and cyberattacks — Hackers use fake emails or malware to gain access to sensitive business data, such as employee or customer information.
• Exploitation of public information — Many businesses are required to publish sensitive details like financial statements or tax IDs, which can be exploited by identity thieves.
• Dormant business exploitation — Fraudsters may target inactive or dormant businesses by reactivating them through state filings and using their identity for fraudulent activities.

The chances of being victimized are worse if a business fails to put protective measures in force. Small businesses can protect themselves by implementing strong cybersecurity measures, regularly monitoring financial accounts and being cautious with sharing sensitive information.

Potential liability of business owners for identity theft 

If an employee commits identity theft using business information, the company can face significant liability, especially if it has failed to implement proper safeguards to protect sensitive information. Victims of identity theft can sue a business to recover damages for financial losses they have suffered as a result of the company’s negligence, such as inadequate training and supervision of employees.

Employees who might commit identity theft

Business leaders must be aware that their most trusted employees are often in the best position to access sensitive information and to use it unlawfully. Employees might steal information due to:

• Financial stress — Employees under financial hardship are more inclined to misuse business resources.
• Lack of supervision — Employees with access to confidential information, such as those in human resources, accounting or IT, may be tempted to use it for personal gain.
• Low job satisfaction — Employees who feel undervalued may rationalize stealing personal information or company resources.

Arizona business owners must remain vigilant about the threat of identity theft and take proactive measures to protect private information. Our attorneys can advise on best practices for handling data, restricting access to confidential information and adopting other strong internal controls.

Contact our Phoenix law firm for counsel on identity theft prevention

At the Law Offices of Donald W. Hudspeth P.C., our Arizona business attorneys help companies guard against internal theft of personal identity information. Call us at 866-696-2033 or contact us online.