Corporate identity theft costs British business about £50 million a year, according to the Metropolitan Police, and it’s a growing problem.
This figure is much smaller than the £1.3 billion personal identity fraud is believed to cost every year, but that is no consolation if your company is one of those the fraudsters decide to attack. So it is important to be aware of what form corporate identity fraud can take and introduce some initiatives and procedures which can help to avoid it.
Criminals can fraudulently change a company’s details at Companies House through theft or misuse.
This can result in the loss of company assets, damage to reputation and credit worthiness as well as an erosion of customer confidence
Fraudsters could appoint themselves as a company director, enabling them to empty bank accounts or to trade under your company name, using it to buy goods on credit, for which you will end up liable.
Remember that company details can often easily be extracted from company websites, where fraudsters could obtain the details of directors, the company secretary or administrators who are permitted signatories for the company.
Forms can also be quickly and easily downloaded from the Companies House website to enable criminals to fraudulently change your business details
Companies House has, therefore, developed a three point plan for businesses which will help minimise the risk of corporate identity fraud, as well as safeguard the personal information of the company’s directors
- First of all they recommend online filing (Webfiling), as a safe and more secure way of sending statutory information. This option is also cheaper, with annual returns costing £15 to submit online, as opposed to £30 by post
- Secondly, businesses can sign up for the PROtected Online Filing service (PROOF), designed to reduce identity fraud further still, as it means Companies House will only accept forms relating to changes of address and directors’ details from you electronically
- Thirdly their “Monitor” service enables you to keep an eye on information being filed, by sending you an email alert whenever there has been a change to the details they have listed for you at Companies House.
Although the Monitor service is not free, at £50 per year per company it could be money well spent if it alerts you in time for you to head off any potential fraud. It is also a small price to pay for peace of mind.
Additional precautions can be taken. These include securing sensitive documents with limited staff access and shredding business documents, followed by careful disposal. Companies can also secure electronic communications with adequate firewalls and software to protect systems against viruses.
The Companies Act places a legal duty of care on all company directors, and if you have concerns over how to comply with these duties, as well as how to implement the safeguards recommended above, then speak to a qualified accountant.