How to Know if a Company is Legit?

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?

Research is one of the most effective ways to determine if a company is legitimate. Scammers aren’t the only ones who can use technology to their advantage customers, investors, and businesses can do the same. The internet offers limitless resources to search, verify, and authenticate a company’s credibility.

Whether you’re a business professional, financial trader, or shopper, conducting a simple online search can help you stay protected from scams. Before making any investment or business transaction, always take the time to verify a company’s legitimacy to ensure a safe and trustworthy experience.

Things to Look Out for While Conducting a Business Transaction

Just as businesses implement Know Your Customer (KYC) protocols to verify their clients, it’s equally important for individuals and organizations to adopt Know Your Business (KYB) practices before engaging with any company. Scammers often pose as legitimate businesses, making due diligence essential to avoid falling victim to fraud.

To ensure credibility, government agencies have established regulatory bodies that assess a company’s financial stability and legal status. In the UK, Companies House maintains a database of registered businesses, while the Financial Conduct Authority (FCA) regulates financial service providers. In the U.S., businesses must be registered with the U.S. Department of Commerce, and the Better Business Bureau (BBB) serves as a trusted resource for verifying business legitimacy.

Additionally, review sites play a crucial role in shaping a company’s reputation. Learn more about their influence in our guide, The Role of Review Sites in Shaping Brands.

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 them 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 local 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.

Final Thoughts

Scammers are constantly evolving their tactics to deceive unsuspecting individuals, but with a bit of research, it’s possible to stay one step ahead. Before engaging with any business, always take the time to verify its legitimacy, customer reviews, and registration status to avoid potential fraud.

If something feels off or you suspect a company might be a scam, don’t hesitate to take action. Learn how to report fraudulent businesses in our guide How to Report a Scam Website.

By staying informed and cautious, you can safeguard your finances and make confident business decisions in an increasingly digital world.

To report a fraudulent website please contact us.