How Identity Theft can Derail Online Business Growth

By James Mellor posted 05-18-2021 13:56

  

Of all the security issues online businesses face today, identity theft can often do some of the most severe damage. A major concern for businesses entrusted with personal data about customers is to prevent identity theft. Birth dates, email addresses, credit card numbers and other information collected in the course of sales must be protected. 

In recent years many states have put laws in place to ensure that businesses protect such information. A data breach can be very costly for a business, negatively impacting cash flow, causing problems with suppliers and creditors, and damaging its reputation. 

What is identity theft?

In days gone by, thieves had to steal paper files or sort through trash to find personal information. Now thieves can physically steal one laptop and compromise the personal information of customers or they can steal online information from all over the world and trade it on the black market. 

Having stolen personal identity information means fraudsters can use this information and easily represent themselves as the victim of the theft. The consequences of identity theft can be devastating and it can take many different forms, such as credit card fraud, tax-related fraud, and employment fraud. 

Account takeover is a common form of identity theft where hackers illegally gain access to another person’s account so they can change passwords or transfer funds. Using Accertify’s Digital Identity helps businesses to recognize trusted users and identify account takeover fraud problems. 

How data breaches occur

Employee mistakes: Employees may have the best of intentions but they can fall victim to fraudsters or mistakenly violate data security policies. Hackers often use phishing and social engineering to get employees to inadvertently reveal information. 

With more remote working, there is more potential ruse with employees logging onto business networks from home via their own devices. In many cases, they lack adequate threat protection software and could leave the business network open to attack. 

Malicious employees: Employees may perpetrate data breaches for their own financial gain. They may carry out white-collar crime, spy for competitors or sell customer files. 

Attacks from external sources: Most breaches appear to result from hacking. Hackers may break into a business network through various means, such as exploiting vulnerabilities, using malware or figuring out default passwords. Spyware is malicious software that monitors online activity, gains access to a hard drive in the business network, and shares the information with third parties. 

Consequences of data breaches

Stories about large-scale data breaches keep making news headlines. Many large businesses have experienced serious data breaches over the past few years and even small businesses may find their reputation suffers as a result of a breach and they can fail to regain the trust of their customers. 

Customers who believe that businesses are negligent with their cybersecurity measures may decide to take legal action against them and this could result in huge legal bills. 

Taking action

If businesses are familiar with identity theft and the various ways cybercrime can take place, this is the first step toward taking effective precautions. Firstly, it is important for businesses to provide employees with training about confidentiality and the potential dangers of identity theft. 

It is also essential to have the right technology in place to help reduce the risks. For example, merchants experiencing a high amount of chargebacks due to identity theft can use fraud filters to screen each incoming transaction. 

They can red flag purchases with a high probability of fraud and cancel questionable transactions. There are security solutions available that can help businesses to address security risks across the entire customer journey. 

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