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Business Identity Theft

tleeth.jpgBusiness identity theft is a broad term that encompasses a wide variety of crimes involving the unauthorized use of a business entity's identity. For purposes of our discussion, we are not talking about trademark infringement or the illegal use of another company's logo, name or service mark. The true concern here is the same as individual or personal identity theft. The unauthorized alteration of business records filed with the Secretary of State's office in order to carry out fraudulent acts using the business entity. There have been documented cases of business identity theft in more than half of the states. The Indiana Secretary of State's office is not aware of any reported case in Indiana. However, the Secretary of State does indicate that there is no data, poor reporting of this crime and the lack of penalties, regulations or prosecution, and there is likely as lag in the occurrence of the crime and reporting and prosecution of the offense.

How does this happen? One of the most common schemes is where the thief changes the name of contact information electronically on the Secretary of State website. They have now hijacked the entity and the true owners do not know anything is amiss. Names and addresses are changed. With control of the business entity, the thief will apply for and receive credit or make other fraudulent transactions in the business entity's name. Thieves typically choose an "abandoned" business entity, one that has been administratively dissolved, and then reinstate the entity themselves. In these instances, the thief takes advantage of the fact that no one is watching because likely the owners have closed up shop and moved on.

One reason Indiana has no reported cases is due to the difficult process of reinstatement of administratively dissolved business entities. Reinstatement in Indiana requires clearance by the Department of Revenue and is not a quick process which the thieves avoid. Still, it is important to be aware of this emerging threat to business owners. What should you do? Just as you should monitor your personal credit through reporting agencies, you should monitor the business entity status of each entity on the Secretary of State website. Business entities that are no longer used should be wound-up and formal dissolution of the business entity filed with the Secretary of State.

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