Everyone should take precautions against identity fraud, but if you use a credit card for your business, you should be extra careful.

Small-business owners suffered identity fraud at 1.5 times the rate of other adults, according to the latest identity fraud survey report by Javelin Strategy & Research, a San Francisco-based provider of research on financial services.

Why?

Small-business owners simply make more transactions than typical adults because they use credit cards for both personal and business use. In fact, 86 percent of entrepreneurs reported using credit cards primarily or exclusively for business, according to the National Small Business Association 2009 credit card survey.

Here are five tips from Javelin Strategy & Research for protecting yourself against identity fraud.

1. Monitor Credit Card Use

Check your credit card statements online at least weekly to monitor activity, and sign up for your credit card companies’ transaction alert services, which send real-time alerts any time there’s unusual activity on your account. Well over a third, 43 percent, of reported identity fraud cases were spotted by consumers monitoring their accounts, Javelin found, and those who used electronic methods detected fraud faster and experienced lower average out-of-pocket costs.

2. Check Credit Reports

Check to make sure no one has opened fraudulent accounts in your name. You can get free annual copies of your personal credit reports from each of the three major U.S. credit reporting bureaus through AnnualCreditReport.com. If you have a business credit card, you can sign up for self-monitoring at one of the commercial credit bureaus, including Dun and Bradstreet or Experian’s Small Business Services.

3. Protect Hard Copies

Keep your personal and financial records locked up at home and at work. In 13 percent of identity crimes last year, the victims had known the perpetrators, according to Javelin. Shred any documents with personal financial information before throwing them away, including credit card offers.

4. Prevent High-Tech Credit Card Fraud

Keep your anti-virus software up to date, secure your personal and financial records behind a password, use hard-to-guess passwords on your computer and online, and install patches and software updates as soon as they are released.

5. Respond Quickly to Credit Card Fraud

Call your credit card companies right away if you discover fraudulent activity, and place a fraud alert on your credit reports if you’re notified that your personal information was compromised in a data breach. With a fraud alert on your report, creditors must verify your identity anytime a credit application is made in your name.

Published 02/28/11 (Modified 03/30/11)