The Rise In Business Identity Theft: What You Can Do To Safely Dissolve Your Business

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://abovethelaw.com/2015/07/the-rise-in-business-identity-theft-what-you-can-do-to-safely-dissolve-your-business/

What has generally been common practice for thousands of companies may
present an opportunity for identity thieves. When a company takes steps to
“administratively dissolve” by failing to comply with certain legal or
fiduciary duties such as filing timely annual reports, following certain
procedural requirements, or paying its taxes, the state in which the
company is incorporated may revoke or dissolve the noncompliant company.
This approach opens the possibility of a number of problems, including (but
not limited to) identity theft.

With proper guidance and advice, the practice of administratively
dissolving a company may eliminate several potential vulnerabilities. One
of the most overlooked and growing areas of concern is that thieves are
targeting “dormant” entities at an increasing rate. Criminals realize that
these entities may be vulnerable because they are less likely to be
monitored for any business registration activity. The risks associated with
not properly dissolving a state registered company may quickly amount to
hundreds of thousands of dollars.

Identity theft trends indicate that criminals are looking to exploit state
filing systems and business registration websites for financial gain. By
filing bogus reports with Secretary of State offices or altering online
business records, these criminals have been able to steal considerable
amounts of cash and property using fraudulently obtained lines of credit.
By altering business records, criminals may appear to have the authority to
act on behalf of a victim entity, which in turn, enables them to apply for
credit accounts with various lenders, retailers, and suppliers. In one
case, according to an Atlanta TV news segment, a Georgia-based music
company became the victim of a corporate identity theft scheme similar to
that described above in which the thieves ran up nearly $300,000 in
fraudulent credit card transactions. Creditors attempting to verify
application information may face difficulties immediately detecting
fraudulent activity because the business records on file with the state
have been altered to match the fraudulent credit application.

To avoid the unnecessary exposure and risk of identity theft, we are now
advising our clients to take the appropriate affirmative steps in order to
voluntarily and safely dissolve their business without being left
vulnerable to such criminal activity.

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