Business owners must take steps to guard against ID theft

Identity theft is one of the newer issues that financial planners are contending with. As a person accumulates assets heading into retirement, or is already distributing assets in retirement, identity theft can be detrimental, expensive, and time-consuming. My clients are looking for direction in protecting their financial assets as part of their comprehensive financial plan.

Even if you haven’t been a victim of identity theft, it’s a common enough crime – the federal government estimates that as many as 9 million Americans have their identities stolen each year. Victims of identity theft are faced with the devastating result of a possibly ruined credit score, and therefore a major road block when it comes to securing a financial future.

Identity theft can be particularly devastating for business owners. Imagine if your corporate identity were stolen, therefore putting at risk your ability to obtain lines of credit. Having a solid credit score is vital in helping to create cash flow and pay for overhead costs, therefore helping you grow your business.

Businesses also risk losing valuable client and proprietary information in addition to their own personal data. Communicating sensitive information via Gmail, Hotmail and other basic email servers poses a substantial risk by putting that information out into cyberspace. Blackberries and other PDAs are also vulnerable to hacking. Homes and offices that use baseline systems for investing, banking and other delicate activities are creating a one-stop shop for identity thieves to snatch routing information, account numbers, passwords and PIN numbers.

Securing your communication both at home and in the office is the best solution to identity theft. This does not mean using off-the-shelf routers or firewalls; a serious investment must be made. Purchasing a proprietary server inside your home or office secures information by running and encrypting all information.

Years ago identity thieves found information by digging through garbage cans. Now they’ve advanced to the level of parking outside homes and hacking into open networks or creating fake ATM PIN pads. If more people secured their communication, we’d really be able to handcuff identity thieves.

Other simple steps you can take to protect your identity include:

-- Not putting your address on your personal or business checks

-- Shredding documents before discarding them

-- Avoiding ATMs that are not located inside a bank

-- Avoiding debit cards

-- Ensuring that employees and staff are properly vetted

The keys to preventing identity theft are awareness and education. Once people accept that the risk of identity theft is high, but they can substantially mitigate that risk, they can work toward easy solutions. Nothing is impenetrable, but if you make life difficult for identity thieves, they will move on.