Identity theft affected 20 million Americans in 2016. That translates to about one out of every 10 adults in the United States. Unfortunately, a large number of those people defrauded -- nearly one quarter -- discovered they were a victim of identity fraud by accident.
Identity theft can be disruptive and costly. Fraudsters can use stolen identities to open new bank accounts and credit lines, make large purchases, and even steal your tax refund. Worse yet, if your business's lax practices allowed your customers' identities to be stolen, you could be exposed to legal liability from state and federal regulators and customer lawsuits.
Here are three steps your business can take to minimize the risk of fraud:
Protect Social Security Numbers
For a thief, a stolen social security number is the next best thing to stealing cash. Credit histories, bank accounts, credit cards, insurance policies, and tax information is keyed to social security numbers. For this reason, both federal and state laws require businesses to take special care in protecting their customers' social security numbers.
For example, the Fair Credit Reporting Act and the Privacy Act are U.S. laws that regulate how social security numbers are used by the credit issuers and the U.S. government. Other businesses that collect social security numbers, such as gyms, schools, and state DMVs offer varying levels of protection.
However, aside from regulatory breaches, the consumer may have a basis to file a lawsuit if your business failed to act in a reasonably prudent manner in protecting social security numbers.
The clearest way to avoid liability for stolen social security numbers is not to collect them. Use other personally-identifying information rather than social security numbers to identify customers. In some cases, however, social security numbers are essential. Tax preparers, payroll processors, and other financial services firms must collect social security numbers.
For these businesses, high security paper shredders are essential. Secure paper shredders ensure that any paper records that contain social security numbers can be completely destroyed. Level 6 shredders virtually assure customers that any shredded documents cannot be reconstructed.
Limit the Amount of Mail You Send to Customers
Stolen mail accounts for the many stolen identities. Account statements, for example, can tell a mail thief account numbers, addresses, names, and other personally-identifying information. Combined with the risk of stolen checks, credit approvals, and tax information, stolen mail can provide a treasure trove of information to fraudsters.
Moreover, paper mail is wasteful compared to email or other paperless options. Prudent customers will send paper mail through high security paper shredders rather than maintaining paper records anyway. When you sum the cost of postage, the environmental impact of the postal or delivery service, and the waste of paper, mail has a significant cost for your business and the environment.
Monitor Your Own Records
Being careless with your own internal records can also lead to identity theft. Employees with access to your customers' records can be tempted to steal their identities just like an identity thief rummaging through your trash can. And like identity thieves, employees can be thwarted from stealing customer records through liberal use of high security paper shredders.
Protecting your customers' identities is not just morally responsible — it is good business. By taking care of your customers' records, your business can avoid fines and enforcement actions, reduce the risk of negative publicity, and engender the loyalty of your customers.