Fraudulent Use of EIN Numbers
More businesses are having their financial identity stolen through the fraudulent use of employer identification numbers (EIN). The fraudulent ways criminals can use a EIN can ruin vendor and customer relationships and leave owners unable to conduct business effectively.
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What is an EIN?
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If you have employees, you need an EIN. According to the Internal Revenue Service, "an EIN ... is used to identify a business entity." An EIN is similar to a person's Social Security number. The IRS cannot cancel your EIN; they can only close your business account. Therefore, it's important that business owners treat the security of their EIN as they would their own Social Security number.
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Phishing
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A popular way for criminals to access your EIN is to obtain it through fraudulent emails in a scam called phishing. The Federal Trade Commission defines phishing as "emails pretending to be from financial institutions or companies that send spam or pop-up messages to get you to reveal your personal information." Phishing is a growing online scam. Many businesses with their own top-quality spam protection or domain name still get phishing spam emails weekly.
Credit Card Fraud
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Using your stolen EIN, criminals can open new credit card accounts and change the billing address so you don't receive any bills. It might be too late to stop large amounts of debt from piling up before you realize there's a problem. Delinquent accounts will appear on your credit report and will damage the financial reputation and future of your business. The FTC recommends that business owners monitor all credit card accounts weekly and check a credit report yearly. Awareness is the key to keeping your EIN safe.
Phone and Utility Fraud
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Using your stolen EIN, criminals can open new phone or cell phone accounts or incur charges on existing accounts. They might also use your EIN to get utility services such as electricity and cable television. The FTC encourages businesses to consider using electronic payment methods rather than paper checks through the secured website of the phone or utility company. This decreases the chances of thieves getting hold of your EIN through discarded utility bills. The FTC also recommends using a post office box for mail to avoid theft.
Bank Fraud
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Using your stolen EIN, criminals can create counterfeit checks. They also can access your bank accounts, write bad checks, make electronic withdrawals or try to take a loan out in the name of the business. The FTC encourages business owners to switch to electronic banking and stop accepting paper bank statements that contain your EIN. Business owners should install shedders or hire a professional shredding company for all documents that might contain the EIN.
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