The massive Equifax data breach that exposed personal information of millions of consumers should be of extra concern to small business owners. After all, it’s not just their personal information that’s at risk; a data breach like this can also put their businesses at risk.
For many small business owners, personal and business credit is intertwined in a variety of ways, from small business financing to vendor relationships.
A class action lawsuit has been filed on behalf of small business owners concerned about the impact of the Equifax breach on their businesses. In a news release about the lawsuit, attorney Jason Doss says, “This is a real double whammy situation for small business owners whose access to credit can often live or die in terms of their personal creditworthiness. The breach could either damage the business directly through identify (sic) theft or it could cripple access to small business credit by damaging the ‘linked’ credit of the individual who owns the enterprise.”
Here are five important considerations for small business owners:
1. Your business is at risk of identity theft too
Businesses can be targets of identity theft, just as individuals are. Using a combination of personal information about the owner and publicly available information about the business, crooks can open new accounts in the name of the business, purchase items on credit, and then sell them for a profit. They also can open up loans or lines of credit, giving them access to cash they will pocket.
The business owner may be oblivious to this activity until significant damage is done. After all, few business owners are checking or monitoring their credit. Don’t just focus on personal identity theft after this breach; you must also protect your business from ID theft.
2. You can’t freeze your business credit reports
There’s been a significant spike in the number of consumers placing security freezes on their personal credit reports, hoping to avoid identity theft. There is currently no option to freeze business credit reports. In fact, unlike personal credit, no federal law restricts access to business credit reports, as it does with personal ones. Vendors, lenders, business partners, and even competitors can review your business credit reports. In addition, businesses do not get a free annual credit report as required by law in the case of personal reports. (Currently, my company, Nav, offers the only way to check and monitor business credit for free; those reports include Dun & Bradstreet and Experian, but not Equifax.)
3. Your business may be a target of cyber criminals
Many businesses think they are too small to be on the radar of criminals trying to steal customer information. Think again: Businesses of all sizes are at risk. A Hartford survey, for example, found that 85% of small businesses did not think they were at risk of a data breach. (Hopefully awareness has risen since that survey was conducted in 2012.) For a small firm, a cyber attack or data breach could create headaches from which the business never recovers.