Protecting Your Business from Identity Theft With Shredding Services

Investing in business identity theft protection is crucial to protect the future of your brand. With the Federal Trade Commission (FTC) reporting more than one million identity theft reports in 2023, this issue is clearly worsening. And this is likely just the tip of the iceberg, with the actual number even higher.

Most people think that protecting yourself from identity theft involves high-tech solutions costing thousands of dollars annually, but that’s not true. Something as simple as shredding business documents is one of the most effective moves you can make for business ID theft protection.

Let’s discuss how shredding services can make a difference in how vulnerable your business is to identity theft.

How Businesses Are at Risk for ID Theft

Businesses are popular targets for identity theft because of their substantial financial resources and access to customer data. This is one reason American adults lost $43 billion to identity theft in 2023.

The mechanisms of ID theft differ, but the goal is always the same. Criminals want to obtain legitimate personal details they can then use to access the victim’s accounts, open accounts in their name, or make purchases. Essentially, it’s about creating a false identity using someone else’s credentials.

Truiloo found that the global problem is growing. In a survey of enterprises from across the globe, 79% of companies said they’d encountered ID theft. It’s something that can happen through cyberattacks or by accessing physical documents.

Too many businesses assume that business ID theft involves sophisticated attacks against their IT systems. Instead, it can be as simple as pulling sensitive documents from the dumpster at the back of your building.

Why Shredding is Crucial to Preventing Identity Theft

Shredding is critical to preventing identity theft because it eliminates the chances of someone retrieving sensitive data from the paper documents you discard. However, many overlook the importance of secure shredding.

Ordinary shredding isn’t sufficient to destroy a document’s information in the same way as wiping a hard drive doesn’t remove the data. Criminals can piece together documents and still retrieve the data within.

Secure shredding adheres to industry standards by reducing documents to an unrecognizable form. For shredding to be “secure” it must be impossible to reconstruct said documents.

The benefits of secure shredding include:

• Prevent ID Theft – Regularly shredding documents reduces the chances of personal information falling into the hands of criminals by reducing the number of potential vulnerabilities your business has.
• Stop Data Breaches – Identity theft also opens up vectors for wide-scale data breaches. Pieces of information retrieved from physical documents can set the stage for accessing vulnerabilities within your IT systems.
• Ensure Compliance – Specific regulations are in place for all businesses, with some industries, like law, healthcare, and finance, having even tighter restrictions. Secure shredding guarantees compliance with all applicable regulations, including HIPAA, FACTA, and GDPR.
• Build Trust – Companies that fall victim to identity theft also expose their customers to the same risks. Demonstrating your commitment to avoid identity theft builds trust and gives customers and potential customers peace of mind.
• Go Green – Secure shredding also has the extra benefit of helping your firm reduce its carbon footprint. Most reputable shredding providers ensure the remains of documentation are recycled and reused.

Many people assume that shredding is a defensive measure, but it can also strengthen your brand and benefit other initiatives, such as sustainability. Treat it as an investment, not an expense.

Which Business Documents Should You Shred?

Documents at the end of their lifecycle should be disposed of appropriately. Generally, anything that contains personal or sensitive information should be added to your shredding schedule.

Examples of business documents that should be shredded include:

• Tax records
• Employment tax records
• Business property records
• Corporation/LLC records
• Bank statements and financial records
• Human resources records
• Contacts
• Legal documents
• Anything with personally identifiable (PII)

All of the above will include sensitive information that can be used against you to commit identity theft. However, before you start shredding, beware that each document type will come with a defined retention schedule.

For example, the Internal Revenue Service (IRS) states that tax returns and various supporting documents should be kept until the deadline for you to amend your return has passed and the deadline for the IRS to assess additional taxes has passed. Overall, business tax returns and supporting documents, such as receipts, should be maintained for seven years.

Other Ways to Reduce Identity Theft

Identity theft protection for businesses takes many forms. Shredding alone is only one part of the puzzle. Instead, you must consider how shredding fits your data security ecosystem.

Here are some other business identity theft protection options to reduce your risk even further that go beyond shredding:

• Strong ID Verification – Upgrade your identity verification processes for customers and employees. Add extra layers of security, such as requiring biometric authentication and liveness detection.
• Anti-Fraud Software – The purpose of anti-fraud software is to monitor customer behavior and detect suspicious activity. Banks and similar institutions in the finance sector rely heavily on these solutions.
• Strong Passwords – Enforce more robust password protocols. Require that passwords contain a mix of uppercase and lowercase letters, symbols, and numbers. Moreover, mandates that passwords be changed frequently.
• Encryption Protocols – Secure customer data by using encryption protocols. Converting data into a secure format and hiding it behind an extensive network of firewalls protects data from cyber attackers.
• Access Controls – Follow best practices on access protocols. The general principle is that employees must only have access to the data required to perform their roles and nothing more.
• Educate Your Customers – Unfortunately, many instances of identity theft are caused by customer negligence. Take the time to educate your customers on the risks of ID theft and what they can do to reduce their chances of falling victim to it.

Partner With an Experienced Shredding Service

“How can I protect my business from fraud?”

The best option for business identity theft protection is to work with a secure shredding service that follows and exceeds industry standards.

At Corodata, we’ve worked with businesses up and down California for generations to attend to their shredding needs and protect them from identity theft. To learn more about our array of services, contact Corodata today.

FAQ on How Businesses Can Prevent Identity Theft

What are the risks of not shredding business documents?

Not shredding business documents opens your organization up to identity theft and a host of other serious issues that can damage your brand and cripple your organization. Some risks associated with not shredding include ID theft, data breaches, non-compliance with national and international regulations, and loss of trust.

The potential consequences can cost tens of thousands of dollars, depending on the number of violations. Moreover, many businesses never recover from the loss of reputation that comes with large-scale data breaches.

How often should we shred documents?

Setting up a scheduled shredding service with a professional partner is the best way of adjusting your shredding needs to your business. How often you should shred depends on various factors, including compliance requirements and the volume of documents.

For example, high-volume businesses and companies in sectors like legal and healthcare should consider a weekly shredding schedule. On the other hand, businesses with fewer documents and compliance requirements may opt for a quarterly schedule.

Note that on-demand shredding services are available for micro-sized businesses and non-conventional operations. Talk to your secure shredding partner to learn more about which schedule works best for you.

Can digital data replace the need for document shredding?

Digitizing your physical documents is often seen as a business identity theft protection tool, but there are more caveats to it than that. Although digitization reduces your costs, it doesn’t prevent identity theft. You still need robust digital data protection methods to stop malicious actors from accessing your data.

Regardless of the industry you operate in, you’ll always have some volume of physical documents that will need to be shredded.

What should I look for in a shredding service?

Shredding services must be reliable and comply with industry standards. The biggest green flag you can come across is a shredding company that is transparent about its processes. Examples include professional shredders, background-checked employees, certifications, and clear audit trails.

How do shredding services ensure compliance with privacy laws?

Shredding services obtain certifications, submit to auditing, and regularly vet their employees to comply with privacy laws. Robust, no-tolerance approaches to compliance are the cornerstone of these businesses, as is flexibility. Laws change all the time, and customers expect shredding services to adapt their processes accordingly.

When should I shred these business documents?

Determining how can businesses prevent ID theft requires knowing how retention schedules work and incorporating that into a regular shredding service. Each document will have its own lifecycle that may be influenced by legal retention requirements and how long it needs to be used for business purposes.

Working with a trusted shredding provider ensures you have an expert who can help you determine when to shred each type of document.