Scams are an unfortunate aspect of the world we live in. Though it is now easy to make purchases with one click of a mouse, there is also an increased risk that your personal information can be exploited by unscrupulous businesses. A company may seem genuine, but in reality it could turn out to be a scam. Luckily, there are a few things that can throw up a red flag, and help prevent you from providing sensitive, personal information to undeserving scam artists.
EditSteps
EditReviewing a Business's Website to Determine Legitimacy
Check the company’s website for a legitimate telephone number and address. If there is no way to contact this company offline, this may be a red flag that the business is not legitimate. Since emails and domain names are easy to obtain, having an email address is not as trustworthy as offline contact information.[1]
Remember that both phone numbers and addresses are now super easy to fake. There is a whole industry in providing fake area code and 800 numbers. Even Google now does this, so phone numbers are no longer a sign of a real company. Before doing business, call the local chamber of commerce associated with the address and see if they are a real bricks and mortar company, or simply a referral skimming internet company with a phony address.
Search in other cities to see if a supposedly "local business" is using the same website for operations in other localities. You should be wary if you find the same supposedly local business page being used for another location. Usually these copied phony business web pages are used in many cities and are just copied templates. Many have broken hyperlinks for images and links, which is a tip-off that this may be a phony phishing business page.[2]
Browse the company's website for discrepancies and indicators of professionalism. If a website says one thing in one spot, and then contradicts itself in another spot, that's a red flag that the business is not coordinated and may be a scam that was hastily thrown together. If the website is unprofessional (for example, there are stolen images and numerous spelling errors), this shows that little thought or care was put into creating the website, which could indicate a "get rich quick" scam. [3]
Review the website’s policy pages. Legitimate companies will almost always have terms of use or terms and conditions pages, as well as privacy policy pages. If they do have terms and privacy policies, read through them carefully suspicious sounding language.
Look for decent content. Phony referral business sites usually don't have much content on their sites and usually have lots of legitimate company and BBB logos on their site to trick you into trusting them. A 'big' tip-off are stock photos or no photos of the company building, employees, or products. Avoid the company if all you see are stock photos of their so-called product, which is one of the easiest way to spot a fake web business!
Consider how the company accepts payments. It’s a red flag when a company’s website says they only accept payments through insecure or shady methods, such as only by paper check or cash. This is because PayPal and other secondary electronic payment providers are often considered the safest method for paying online businesses. Look into payment methods which will allow you to get your money back if things go sour and do not require the release of unnecessary personal information.[4]
EditDetermining Legitimacy Through Business Registration and Other Documentation
Make a visit to the company’s brick and mortar location. There are other ways besides using the internet to determine whether a business is legitimate or not. You can learn a lot about a business by simply visiting its brick and mortar location. Your visit may allow you to communicate directly with management and ownership in order to determine legitimacy.[5]
Trade and/or specialty businesses should have their relevant permits, licenses and approved registration documentation clearly on display for customers. If so, check and make sure that these displayed certifications are up to date.
Restaurants should have relevant documentation required by the local Department of Health and Sanitation clearly displayed on the wall. Typically, this type of documentation provides the business with a grade, and the presence of such documentation indicates the legitimacy of the restaurant.
Check the registration data for the company website. You can sometimes find the name and information for the person who registered the website, which you may want to use for further research. Determine when the website was created and when it will expire. If it was only created recently and will expire soon, that may point to the website being a temporary cover for a scam.
The International Corporation for Assigned Names and Numbers (ICANN) provides registration authorization for many website domain names and is a great resource for determining who is the actual owner of the business website that you are researching. [6]
Research whether the business has officially registered with local, state or federal authorities. Businesses that operate as LLCs, Corporations or under other official business entity vehicles are required to register with the secretary of state where they are operating. Similarly, businesses that pay wages to employees are assigned state and Federal Employer Identification number. A business being listed on a state or federal listing shows that they are likely a reputable business.[7]
Review the business's website or promotional materials to see whether they use the phrases “LLC”, “Inc”, “Corp”, in their official business name. If so, you should be able to check secretary of state websites to determine whether the company is properly registered, and thus has the right to use the particular business entity type designation in their name. [8]
Check the Better Business Bureau. The Better Business Bureau (BBB) has both local and national branches that are committed to providing consumers with relevant and useful information regarding businesses operating within their communities. The BBB’s website allows you to search for specific business names, and also provides general information regarding scam and fraud trends.
A lack of a listing on BBB does not automatically mean the business is a scam. In fact ,some BBB listing pages have become a place where consumers can freely voice complaints about the fraudulent nature of a business, as well as past scams that have occurred.
Use industry organizations to determine legitimacy. Some industries have regulatory bodies they are required to register with in order to maintain relevant licenses and certifications. Local and national industry organizations may provide relevant information to the public about its' members and the specific businesses that have successfully registered with the industry organization. [9].
Use a company credit report to check the legitimacy of a company. Using a company credit report service can allow to determine a company's:
Credit score
Contact details
Financial performance
Governance/leadership structure
Number of years in operation
Past legal judgments brought against the company
EditUsing Customer Reviews to Determine Legitimacy
Use Google to search for the company name. You can locate reviews and other information about the company and whether it's a scam or not. If you don't see anything, try the search term: "[company name] scam", and see if results turn up that way. Although it's possible to manipulate a positive online presence, bad feedback is harder to hide.[10]
Check the company's customer reviews on consumer review platforms. Unlike personal blogs, consumer review platforms reflect the opinion of various customers and usually provide an unfiltered view of a company's overall reliability. Trustworthy consumer review platforms will not censor reviews in any way and fight hard against the posting of fake reviews. [11]
Ask friends about their past experiences with the company. Some of your best review resources are the people you live, work or play with. Take the time to ask your friends and family if they have any experience with the company you are researching, and whether their experience was satisfactory or out of the ordinary.
EditWarnings
Never pay those you do not have a preexisting relationship with via wire transfer systems such as MoneyGram, Western Union or other companies. This a very common scam used by those who are operating abroad, because they can pick up the money from multiple locations throughout the world. Also there is no way to reverse these transactions once the victim realizes they have been cheated.
Your best option is to make payments via Paypal, or via other certified and secure and electronic payment systems. This way you do not have to give sensitive and confidential personal information directly to the seller. Instead such info should only be provided to certified third-party payment intermediaries, in order to create a paper trail of the transaction, and also to ensure that the seller has been properly certified and vetted.
EditTips
Don’t assume a company is not legitimate simply because they do not have a significant online presence. If you're looking at a business that is run from home, or if it's a really small company, they may not have business listings or long-lasting domains. Some people cannot afford to pay for them on top of other business expenses.
When you look up reviews, be smart about whose reviews you trust. Some people don't follow all of the directions they were supposed to, or misunderstand the product or terms, and then complain even though it was their mistake.
Don’t assume a company is not legitimate because they do not make their website’s domain owner name public. Some web hosts choose to keep this information private, and the decision to do so doesn’t necessarily meant that the website and/or business is fraudulent.
EditSources and Citations
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