In this digitized world, it is not surprising that most communication and correspondence take place over electronic devices such as computers, smartphones, and so forth. The dependency on these electronic devices is so great that settling financial transactions over these devices is the norm.

However, where there is money involved, con artists are not far behind. It is common for con artists to deceive prospective victims into believing they are safe and trustworthy enough to steal money from them. Although anyone with a decent internet connection and access to computers or smartphones can open up a business, the same is true when it comes to scammers conning many online.

In this article, we will delve into telltale signs of potential online fraud when you wish to buy, conduct business deals, trade, or invest in a particular firm.

How Do I Know If a Company is Legit?

One of the best ways to know if a company is legit or not is to do research. If you think that only scammers can use technology to entice their potential victims, then you are wrong. There is a limit to knowledge on the internet. You can search, verify, and authenticate if the firm you are interested in is legitimate or not.

You can either be a businessperson, a financial trader, or even a shopper; you don’t have to worry. A simple search online can benefit you and help you avoid falling prey to online scams. If you ever get the opportunity to make money through investment, then check company legitimacy.

Things to Look Out for While Conducting a Business Transaction

As you have the KYC, or know your customer, there is the KYB, or know your business. Since online fraud can be compared to an epidemic—the one that grows but never reduces—your best chance is to arm yourself with adequate knowledge to differentiate between a legitimate business and a fraud.

During the great depression that started in the late 1920s, the government formed a body called the Ultimate Beneficial Owner, or UBO. The main purpose of it is to verify and authenticate that the firm exists, is financially stable, and is not involved in shady business practices.

These practices will confirm if the business and its stocks are legitimate if they are registered on the stock market. These practices best suit those that are mentioned on Wall Street.

Scammers tend to create shell or bogus companies. If a financial advisor assures that investing in certain stocks that are not listed in the stock market can assure a lot of profit, then that person is a scammer.

You can always check if they are registered with the FCA, or Financial Conduct Authority, if you are in the UK. All limited liability partnerships and limited companies are registered in a unique database called the Companies House. Verify if the name of the company is listed on it.

If you are in the US, then these companies need to register with the US Department of Commerce. A non-profit organization called the Better Business Bureau, or BBB, verifies and authenticates if the business is legit or not. BBB is useful for those residing in Canada and the US.

All limited businesses and limited liability partnerships registered in the UK have been compiled into this exclusive database.

Go online and check if the company is involved in any litigation. It is also advisable to verify if there are any reviews for that particular firm.

How Do You Check If a Company is Legally Registered?

Since most of the transactions take place online, most companies will have a website dedicated to maximizing their reach around the globe. You can verify, authenticate, and check the legitimacy of the company. By going to their website, you will be able to do that.

1. The Website

To increase their visibility and reach, one can find several online e-shops. To do that, they have a dedicated website. You need to browse the website and check the quality of the written English. If it has a lot of punctuation and grammatical errors, then you should avoid doing business.

For many scammers, English is not the primary language. They will inevitably make mistakes that might tip you off to a possible con.

2. Contact Details

The government and private entities regularly actively update their databases regarding potential online scams. When a scam is uncovered, they add it to their long list of blacklisted companies. Thus, when you are faced with a potential business opportunity, all you need to do is search to see if the said company is under litigation or blacklisted.

Check the headquarters and look in Google Maps. If it is legit, then it will reflect on it. Contact the company through their phone details to verify if the company exists. Ask them questions regarding the business.

It would be wise to do some homework before calling them and asking them about the business instead of just calling them. If you find that the person is more interested in how much money you will make than how the business model works, then it is a clear sign of a potential scam.

Contact the nearby businesses or companies and verify if the company exists in the said locality.

Visit your local law enforcement agency and verify if the company is legit or a potential scam. Since each state has a different law, they may or may not give you the authority to run their business in your state or country.

3. Review

Always check online reviews of the company before investing in or trading with it. Although no business can satisfy everyone, going through the reviews will help you better understand their client service experience. These will help identify fake companies.

4. Payment Methods

Most of the transactions are made online through payment portals. You need to exercise caution. Whether you are a customer or a businessperson, you need to verify the legitimacy of the other person before committing to a transaction.

If the other person is asking for sensitive account details that you would never share with your close ones, then you can be sure that you are heading for a potential scam.

Before you make the payment, check their return policy. If there is ambiguity in it, then it is best that you refrain from seeking service or product from that site.

5. License and Registration

To run a business, you need a license and registration for it. Every business has to show these details on their website. These can be authorized by a government agency or a private one. Always cross-check if these are valid or blacklisted. A blacklisted company has more chances of pulling off a scam than a legit one.

6. Terms and Conditions

These documents are essential, as they provide a window into what after-sales services are guaranteed by the company. If you find it challenging, then it would be better if you were to visit a certified public accountant or a CPA and get it cleared.

Many con artists will levy fake hidden changes in the name of taxes. They will also make these terms and conditions ambiguous. Thus, visiting a CPA will clear up any doubts that you may have.

Sign up for those services only after you have thoroughly understood all the clauses.

Final Thoughts

Although scammers can trick you into making a fake business proposition, a bit of research on your part can help you avoid falling victim to such potential scams. Always do research and check the legitimacy of the other party before committing your funds to the transaction.

To report a fraudulent website please contact us.