How Multinational Companies are addressing their Risks
Identity theft affects both individuals and corporate entities. Whereas personal identity theft has been prevalent in the contemporary society, corporate identity theft has been on a steady increase. This form of crime, which involves unauthorized use of a corporate’s information to perpetuate elements of a crime such as fraud, is more attractive and lucrative to criminals than stealing an individual’s identity. Corporates deal with millions of dollars and have so much money compared to individuals. While there are many wealthy individuals within the society, stealing from a company appeals to criminals because it is less personal and the proceeds are higher compared to those from an individual. Such thieves usually alter an organization’s data such as registered addresses and names. They then use this information to obtain goods and services from unsuspecting companies and individuals. For example, such altered information may be used to obtain commercial credit. It can also be used by a criminal to order from the corporate’s suppliers merchandise worth hundreds of dollars. This is one of the significant reasons why corporate identity theft is on the rise. Organizations and companies are less suspecting when doing businesses with companies. When a reputable and legitimate company orders goods worth millions, a supplier will immediately give a positive response. It is less likely that the supplier will seek further confirmations to avoid irritating their clients and to maintain a good rapport.
In contrast, carrying out such a business transaction in an individual capacity is rare and might cause the company to do some background checks or even seek confirmation from the owners. Therefore, thieves prefer stealing corporate identities for such ventures. They then disappear with the goods for months before anyone can discover that something is amiss. This leaves corporates shaken and victimized and incurs heavy losses which are pushed down to shareholders. This section of the paper will address the fundamental question on how multinational companies are addressing risks posed by corporate identity theft. The paper will interrogate some of the problems caused and the policies and solutions that have been designed to counter this menace. The paper will also articulate the role played by organized crime in facilitating and supporting identity theft. This will provide a nexus on how corporates, governments and other stakeholders can come up with measures that will protect companies from massive losses occasioned by cases of identity theft.
Fortunately for businesses, stakeholders have come up with credible measures to counter concerns of identity theft. This is an ongoing process given the fact that thieves are becoming cleverer aided by increased technological advances. However, most companies have developed a solid understanding not only of such criminals, but also of the schemers perpetuated by such fraudsters. It is also cardinal to note that the fact that organizations, managers and entrepreneurs are starting to appreciate that identity theft is a real challenge to the success of many companies. They appreciate that such a vice waters down significant gains made in building trust and amicable relations in the corporate culture. Therefore, most of them are overcoming their reluctance to come out and boldly suggest ways to address this issue.
In order to identify the initiatives that multinational have adopted to combat the risk, it is vital to identify the victim. In this case, a victim is a company that criminals have stolen its identity in order to use it for malicious purposes without permission from the entity’s management. The company that receives an order requesting a consignment of a particular set of goods or even services is also a victim. Such goods are delivered to the criminals who disappear without paying consideration. The company receiving the order is often a multinational with the capacity to offload a significant amount of goods without much ado. Financial and lending institutions such as banks and finance companies are also not spared. They are often victims when individuals request credit financing in the name of a stolen corporate name. It has been noted that fraudsters usually target companies or government agencies that instill confidence in the market place and financial transactions. Financial institutions are less likely to turn down a request from a credit worthy institution such a publicly traded company or government agency. Criminals will use a positive reference from another company whose registration has also been stolen to facilitate a prompt payment. Indeed, it vital that this menace should be tackled using proper mechanism. This is because it soils the reputation of a company and commercial transactions. It is true that in any commercial jurisdiction that is constantly perpetuated with cases of fraud and identity theft, organizations in that area lose their ‘good name’ and this hurts businesses and related industries. It may also adversely affect the reputation, integrity and standing of a country, state or government department thus shunning away investors.
Corporate identity theft is like individual identity theft in many ways. Therefore, the measures stipulated in a different section of this paper for addressing risks of personal identity theft can be applied in corporate governance. Some of these measures include; protecting sensitive information, destroying all information that is not in use and contains the company’s data, and using proper and secure means of communication with other stakeholders. Corporates should also be carefully about the use of online communications like emails. This is because it is easy for hackers to intercept such information and use it to commit fraud. Companies are also making steps to ensure that their internal servers are securely protected by capable firewalls to prevent any form of encroachment. Hackers can cause a lot of damage if they access internal servers of a company. This is where confidential information and trade secrets are stored. The list of customers, creditors, debtors and suppliers can also be extracted from such servers. Therefore, to avert any form of infringement of their data, multinationals ensure that they have the best form of protection to the data. Furthermore, multinational companies operating in many countries are now encrypting their data and communication. Consequently, even if tech-savvy criminals are able to hacker and obtain critical company information, it would be useless to them because it is encoded. Only the top management of such multinationals or the parties involved in the correspondence can be able to decode such data. This will serve to deter thieves from engaging in such vices because in the end their efforts will be futile.
While a variety of factors have spurred the proliferation of corporate identity theft, there are many ways to avert the risks caused to businesses. If they are not handled quickly, the consequences can be devastating and far reaching. This is because when a company suffers a case of identity theft, it not only suffers the loss of the goods or services and its reputation, but also the conundrum opens floodgates to a plethora of challenges. The company will soil its relations with the other affected companies and may end up being engaged in a countless number of suits with companies seeking payment for services rendered or goods delivered. In view of such challenges, multinationals are cooperating and working hand-in-hand with governments in carrying out crackdowns to identity consumer fraud. When dealing with companies for the first time, a number of multinationals have set up to ensure checks of the authenticity of the company that they are dealing with. However, with the proliferation of internet based services; it has become extremely easy for fraudsters to set up fake companies with forged histories and records. Therefore, multinationals work closely with concerned government agencies to verify authenticity a corporate profile. While it is not customary practice to conduct background checks with all companies that they work with, it has become a necessity of late in case the management of any multinational have basis for suspicion that the company they are dealing with is not authentic. These and other safeguards have become the order of the day for many multinationals. It has become a common practice for multinationals and law enforcement agencies to share critical information especial on emerging trends of crime.
Financial and lending institution operating in several states or countries have also developed a system of checks that enables them to prove the authenticity of companies that they transact business. They have a system that evaluates credit seeking businesses. This is usually in the quest to fish for evidence to substantiate the claims made by the company about its assets, capabilities, resources and management. This has often been referred to as proof of right. It helps corporates ascertain genuine companies worth their salt and which can be trusted in business transactions. Moreover, some multinationals even go to the extent of requesting business addresses, phone numbers, financial statements, business records and the company history. This instills a sense of confidence and legitimacy because each of the claims made is subject to proof under the system of the right to proof.
Multinationals are also on record by urging governments to ameliorate the registration processes within their jurisdiction. This will serve to avert cases where fraudsters falsify business registration documents and use them to exploit unsuspecting companies. Other ways that corporates verify companies they engage with in business is by checking and attesting the authenticity of trademarks, company logos and websites. Thieves use similar identities close to those of the original company. However, if one undertakes to have a close observation, it is easy to detect the minor differences. Furthermore, it is vital to verify the exact physical location. This is because cons can rent an office in the same street or building like the authentic company in order to trick their victims. Therefore, it is the duty of the management from the multinational to know and verify the exact location of the company they are dealing with. In addition to these safeguards, the business community has also partnered with the government in a public-private partnership with a view of exchanging ideas and practices in some of the best ways to tackle cases of corporate identity theft. This has been done by the setting up of toll free numbers whereby victims can report cases of identity theft. This has also been done by using the legislature to enact or strengthen laws that address this issue. Specialized government agencies have also been handy in providing education and information that equip managers and individuals with the requisite tools to fight identity theft. Ultimately, it takes the joint effort of all concerned stakeholders to join up hands in the quest to end this annoying and illegal practice.
The Role Played by Organized Crime in Cases of Identity Theft
Organized crime is usually a product of a group of criminals who operate in numerous jurisdictions by having a well-coordinated and structured organization. Most of them use centralized enterprises disguised as legitimate business, but engaging in illegal activities. They are run by criminals for profit making purposes. Organized crime is a highly complicated criminal activity that has a nexus to significant criminal areas like terrorism, counterfeit and cybercrime. Therefore, the nexus between organized crime and identity theft, whether for individuals, corporates or multinational is not a unique phenomenon, but one of the significant areas that interest organized criminal gangs. Organized criminals have existed for centuries. As the world embraces the digital age, they too have not been left behind. They have quickly adapted to the information age by acquiring and equipping themselves with the requisite skills, expertise, knowledge and experience to steal data that has been stored or protected technologically. They later use this information to commit financial crimes in pursuit of profits or funds to further their objectives.
Of late, such criminal organizations have gained currency in defrauding and manipulating not only individuals, but also corporate entities and business within the virtual world. In a high coordinated and well-funded operation, organized criminals engage in the hacking of unsuspecting companies and stealing their identities. In order to cover their tracks, they may go to an extent of renting a floor in the same building as the company whose identity they have stolen, but on a different floor. They also set up fake phone records and financial statements. They then use this information to seek credit from lending institution or order merchandise worth millions of shillings. The victim companies will promptly comply with the request from the fraudsters because of the standing of the requesting company or its credit history. The fraudsters will be long gone before anyone realizes that they have been conned. In most cases, organized criminals operate from many states and involve perpetrators who have been transported to another country awaiting their next instructions.
Organized crime has facilitated the proliferation of not only the stealing of identity of companies, but also other forms of cybercrime to international levels. This is because in order to pull off an operation to steal the identity of a reputable corporation of a multinational company, the fraudsters must be extremely connected, experienced and skilled. The process involves a lot of technical know-how that can only be implemented by experts that are well funded and connected. This means that this is not an area that petty criminals can survive, but a reserve of organized criminal gangs.
The internet has been instrumental to organized criminal gangs in planning to steal identities of corporates and individuals. Victims have lost most valuables in auction sites such as eBay and others. The levels of fraud range in millions of dollars. To be efficient in their vice, perpetrators of identity theft have a transnational criminal network. This means that by using the internet, criminals can steal an identity of a corporation within the United States despite the fact that the physical location of the thieves is outside the country. The stolen identity will then be used to defraud another company anywhere in the world. Criminals engaged in this activity leverage technological techniques by blending them with old-school organizations of organized crime. For example, in March 2010 an identity theft gang leader was sentenced to 20 years in prison in the United States. Albert Gonzalez led one of the most sophisticated and efficient organized criminal gangs that specialized in identity theft. He and his gang were involved in an illegal activity popularly referred to as ‘wardriving’. This entailed driving around urban areas and cities looking for unsecured wireless network of major corporations. His gang would divide themselves into groups touring different towns and cities in different states to hack into unsecured systems. They stole more than 40 million dollars in less than a year using credit and debit card numbers retrieved from servers in most of these corporations. In order to cover their tracks, they laundered the money through the United States, Estonia and Ukraine hiding the money in Eastern Europe banks.
Within the last decade, many organized criminal gangs have experienced a paradigm shift from their traditional ways of doing business to new ones in the information. Facing with increased crackdowns in their customarily areas of activity, globalization and increased technological and communication advancements, they have had no option but to change tact. This has caught a number of people and corporations unaware causing them to suffer millions of losses as a result. The use of technology to steal identities of corporations by organized criminals is less dangerous and more lucrative than planning for robberies and housebreaking. They have also realized that law enforcement agencies are finding it harder to trace or even identity them. Therefore, organized crime is nowadays structured in a networked or cellular model which makes it flexible and efficient. This makes it harder for the law enforcement agencies to identity a conspiracy and the perpetrators. By using such a system, organized criminals will quickly assemble themselves, hack and steal the identities of targeted companies and use them to defraud other companies. They divide the proceeds and disappear. By the time the victim companies are aware of what hit them, they cannot figure out the form or structure of the perpetrators. It is vital, therefore, that all stakeholders in including companies and the government engage each other in handling this conundrum. In particular, stakeholders need to identify available options in the marketplace that would be instrumental in curbing cases of identity theft. More fundamentally, it is cardinal that technological designs be prepared do address this problem in order to save businesses and multinational companies from massive losses.
References
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