"While there's a lot of media attention for what's happening online and with large criminal gangs, the reality is more than 50% cases of identity theft in the U.S. are 'friends and family fraud,'" according to Scott Mitic, CEO of Redwood City, Calif.-based TrustedID, whose solution, ID Freeze, helps individuals and small biz to reduce their risk of identity theft. "Our offering helps them understand how their information is being used and also prevents it from being used in ways they don't want."

Just how pervasive a problem is identity theft? According to the FTC's 2008 Consumer Sentinel Network Data Book (PDF), identity theft was the No. 1 complaint category of the 1.2 million complaints logged last year. The majority of those who fell victim were between the ages of 20 and 59 -- in other words, people in the workforce. The ways that happen varies, such as responding to a "request for information" by telephone or in an email, losing a laptops or wallet, and just plain carelessness -- say, leaving sensitive documents on the printer.

"What's really scary is that probably for the vast majority of small business in the U.S., the proprietor's name, social security number, and, therefore, credit rating are at the heart of what helps it finance itself," said Mitic, whose offering is part-software, part-in-the-cloud, monitoring for computer spyware and misuse of credit reports, among other threats. "So unless you have a wonderfully cash flow positive business and don't need access to credit, your company is likely to be dependent on your good credit standing."

As such, identity theft has a "multiplier effect" on small businesses, he added. "You're not only affecting the individual -- you're affecting the business so inexorably linked to that individual," Mitic said. "If you get wiped out by identity theft and it takes six months or a year to get your credit score back to where it should be before the crime, that's six months or a year when that individual doesn't have access to, in a best-case scenario, inexpensive credit, and in a worst-case scenario, any credit at all."

So how can you protect yourself from falling prey to the identity theft vultures who you likely already know? Mitic offered the following three tips, which his company's product can address or that any other you're considering should:

1. For any small business, some form of antispyware protection is an absolute must, he said. "In the old days we were concerned about viruses, but what is critically important now are services that help you prevent keylogging software from getting onto your computer," Mitic said. "Anyone who has a business that's involved in any type of sensitive information absolutely must have this on their computers." (Keylogging software, Mitic explained to me, looks into a computer's operating system and watches for deviant behaviors, such as your computer sending out random messages with data attached to them. "That's how spyware works," he said. "It has to talk back to the mother ship."

2. Small businesses need to safeguard their social security numbers and credit. Mitic provided three ways of doing so:

• Get an employment identification number (EIN) and stop using your social security number. "Every time you're exposing your social security number, you're inviting a crime to be committed," he said.
• Consider placing a fraud alert on your credit reports by calling each of the three credit bureaus (Equifax, Experian, and Transunion). "Doing so requires lenders to contact you before issuing credit in your name using your social security number," Mitic explained. "This reduces the risk for someone being able to use your identity for some kind of financial gain."
• A third option that's one step beyond a fraud alert is to freeze your credit report. "A bank can't get access to your report without having you first unfreeze it, so it stops a thief dead in his tracks," Mitic said. "There is no more certain way for a small business to ensure its identity won't be used to commit a financial crime."

Keep in mind that freezing, and unfreezing, your credit report isn't free -- doing so costs, on average, $15 a pop. But Mitic said it's an option worth considering when your business is going well and you don't anticipate the need to finance anything; if you have already have been a victim of identity theft and want to reduce the risk of any remnants of the crime "coming back to haunt you later"; and "if you're just paranoid and don't like the thought that your information is readily available."

3. Besides for-pay monitoring services like the one TrustedID ($9/month for an individual or $19/month for groups under one roof) and others offer, small businesses have an their disposal relatively simple ways to monitor what's being said about their businesses publicly. Setting up Google Alerts is one example. So is watching your Better Business Bureau standing.

"Remember, every time you share your information with anyone, you're putting yourself at risk," Mitic said. "In the course of our business and personal lives, we've become so used to sharing a lot of information with the people who ask. It's OK to say no or inquire what legitimate use they have for that information. Push back a little bit."