The Fraud Examiner

Duplication of an Organization: What CFEs Should Know About Business Identity Theft

January 2014 

By Zach Capers, CFE 


For years we have been warned about the threat of identity theft and the need to protect our personal information from those who seek to misuse it. However, the same emphasis has not been placed on business identity theft.


Business identity theft can be described as the misappropriation of an organization's tax identification number or other sensitive information necessary to imitate the identity of the business for illicit purposes. Criminals obtain tax identification numbers through various means, such as searching for them online, examining filings with securities regulators, reviewing tax forms, phishing or social engineering.


Fraudulent Changes to Official Records 

Further complicating matters is the manipulation of company registration records on file with government entities — an insidious practice that often coincides with a business identity theft scheme. Fraudsters sometimes make changes to a company's official address, board members, salaries or other pertinent information to ease the implementation of a scheme. Thus, for example, when a business identity thief applies for a fraudulent line of credit in the name of a victim company, the application appears legitimate because the official records checked by creditors have been manipulated beforehand.


Various Schemes Perpetuated 

Numerous schemes related to business identity theft have been reported, running the gamut from fraudulent credit card applications to complex multi-million dollar bogus stock sales. In some cases, long-dormant businesses have been fraudulently re-instated and used for nefarious purposes. 

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