Following my recent articles on working online, maybe you have now decided to work online from home or are already doing so. Since you would be purchasing products and services from companies you’ve never dealt with, it’s advisable for you to know how to find out as much about them as you can beforehand.
A sad fact of Internet life is that you would come across people and companies that may look legitimate but in reality are outright scams poised to pounce on your hard-earned money.
For that reason, it pays to be vigilant at all times and to have a healthy dose of suspicion whenever you are making purchases of products or services from companies (whether they’re an online merchant or even a shop on the high street) using your personal details.
You should do as much research as you can about the trader and their business. This will help you make informed decisions before dealing with them. It goes without saying that this is crucial if you are going to dish out a lot of money for the goods or services.
I’m sure you don’t want to be the next person to be duped by a scammer if you can at all help it.
In this wise, listen to Christine Durst, cofounder of RatRaceRebellion.com and consultant to the FBI on internet scam issues: “There is currently a 61-to-1 scam ratio among work-at-home job leads on the internet.”
That is, for every legitimate company, there are 61 scams. The disparity is huge. Fortunately you have the following means to let you tell the sheep from the wolves in sheep clothing.
So it is in your best interest to know how to tell if an online business is legitimate or not so that you don’t waste your time, effort and, especially, money.
Fortunately, the following 8 indications are very powerful in throwing up red flags. Use some or all of them to protect yourself from falling victim to a dirty SCAM.
1. Check the Company’s Registration Status
One of the ways to find out if a company is legitimate is to check its registration status through its National Registration Authority, the Financial Conduct Authority Register, Membership Associations, Regulatory Bodies, Permits, Certifications or Licences, ISO status, Government departments and agencies responsible for business and consumer affairs, and Authority Websites.
In every country, companies, businesses and other traders must be registered before they can operate legally.
There are not only many ways to do this but also registration and other options differ from country to country.
Federal Employer Identification Number: If the company is based in the USA, look for a listing with the Secretary of State and/or for a Federal Employer Identification Number. If the company has one, they likely are a reputable business.
Companies House is the United Kingdom’s registrar of companies and is an executive agency and trading fund of Her Majesty’s Government. Falling under the jurisdiction of the Department for Business, Innovation and Skills (BIS), it is also a member of the Public Data Group. All forms of companies (as permitted by the United Kingdom Companies Act) are incorporated and registered with Companies House and file specific details as required by the current Companies Act 2006.
Australia Business Number: All companies incorporated in Australia must be registered with the Australian Securities and Investments Commission (ASIC).
The ASIC website has several registers which are free to search, such as the Organisations and Business Names register. This indexes Australian corporate and registered business names and some incorporated associations.
To check if a business or trader’s name is registered, click here for the National Names Index check the National Names Index.
For all other countries, Google for their national company registration processes for more details.
The FCA register: If the company you are going to deal with works in the financial sector and deals in financial services or products, check out their credentials on the Financial Conduct Authority (FCA) register, a comprehensive database containing details of every financial company registered with and regulated by the FCA. Simply enter the company’s name and/or postcode to search for it.
Membership of Associations: Many industries are represented by professional or trade associations. Although membership is generally voluntary, serious companies will always join them because of the benefits which will accrue to them.
Ask the trader you are dealing with if they belong to an association. If they say yes, ask them for the membership or licence number. Then contact the industry association to verify the information.
Membership of Regulatory bodies: Some industries have regulatory bodies with which companies in those industries have to be registered. Research the industry of the company you are going to deal with to see if they comply with these regulations. If they do, check their status with the regulatory body. But run or proceed with caution if they don’t.
Permits, Certifications or Licences: Many companies, businesses, trades people and professional services require additional registration, permits, certifications or licences for their members to comply with before they can operate their businesses. These licensing systems not only help industries maintain professional standards but also encourage consumer confidence.
Therefore ask the trader for any of these and verify the information.
ISO status: Certified organisations often display their International Standards Organizations (ISO) status on their websites. Still you must check the authenticity of the logo since they can be easily copied and used fraudulently to fool would-be buyers into trusting scammers.
So what to do if you have doubts about a particular organisation or you just want to undertake a final reassuring check?
Most ISO certification logos display the Certification Body that issued the logo. To verify, contact the Certification Body. To do so, search for Certification Bodies by visiting the UKAS website, who are appointed by government to oversee Certification Bodies in the UK.
The company name is enough to verify its status. Sometimes, the logo will also have a PIN or certification number underneath to help further.
Check the buyer’s guide created by the ISO for you to verify whether an organisation is legitimate or not. Furthermore, they are also ready to help you ascertain if a company is certified by them.
Government departments and agencies responsible for business and consumer affairs: Check up these in person, by telephone or online.
AuthoritWebsites: y All countries have authority websites that contain database of registered companies with very important registration and other information about the firm. Here are some of them:
For US/Canada – The Better Business Bureau: While registration with the BBB is an indication that the company exists, it is not a guarantee of its seriousness. In the same vein, lack of a listing with the BBB does not necessarily mean the company is a scam. In either case, your best bet is to consult reviews to know which side of the scale the company tilts most.
Put Companies House website logo here?
For UK – Company’s House Website: Companies House website This is a UK government’s resource, useful for performing a search of all 2 million+ limited companies trading or registered in the UK.
You can get some details about a company for free, including:
• company information, eg registered address and date of incorporation
• current and resigned officers
• document images
• mortgage charge data
• previous company names
• insolvency information
For Australia – Companies registered in Australia should have an A.B.N. (Australian business number), which you can verify here. http://www.abr.business.gov.au/Index.aspx In some cases, you can legally withhold sales tax at 46.5% if the company you are dealing with is registered in Australia but has no Australian Tax Office compliant Tax invoice.
The following websites might also have information about a trader registered in Australia:
Click here for warnings issued in extreme cases about Australian businesses you should not deal with.
For India – Minsitry of Corporate Affairs (MCA) regulates corporate affairs in India through the Companies Act, 1956, 2013 and other allied Acts, Bills and Rules. MCA also protects investors and offers many important services to stakeholders. Ministry of Corporate Affairs
For all other countries, Google to find out the authority website.
While being registered doesn’t guarantee that the company or business won’t engage in scam activities, at least it is a good sign. Now, let’s see the second sign which can also throw up red flags.
2. Check the Company’s Contact Details
To the question “How do you know if an online company is legitimate?” the answer may come from its contact details. You can check for a company’s physical, concrete location through its landline number and especially the physical address.
Put image of landline number here?
Landline number: Check the website or the headed paper of the company you are going to work with, or consult the telephone directory for a phone number, preferably a landline one. Then call this number. If an employee answers, it is some reassurance that you are dealing with a genuine company. But if you’re redirected to an anonymous call-centre this may be a warning sign that the company is not legit.
Since many genuine companies now outsource their calls to call centres, it would be better to call the local chamber of commerce associated with the company’s address to see if you are going to deal with a real bricks and mortar company or a stinking scammer with a phony address.
Put image of physical address here?
Physical address: You should also look for a company’s physical address on its website, in the telephone directory or on its headed paper. It is even better if this address is a registered office. Write to this address to see if you would receive a reply or if the letter would be returned to you (“return to sender”).
Street addresses are preferred to P O Boxes, although in some parts of the world (Africa especially) letters are distributed through P O Boxes and not street addresses. This is the case of my country Togo.
Note that both phone numbers and addresses are now very easy to fake or obtain. The latter comes from a whole industry which provides fake area code and 800 numbers. So a phone number may not necessarily be a sign of a real company.
As for emails and domain names, they are so cheap and so easy to obtain that having an email address is nothing to trust a company by. Even people who work from home have a physical address and a phone number.
3. Check the Company’s Website
Another way to tell if a company is legit is to take a look at its website. Check registration details, discrepancies and lack of professionalism, refund and exchange policies, configuration of the payment gateway, same business page for another city, new or about to expire domain, and the legal WebPages.
If you are going to deal with an online company, obviously the website will be your first port of call. But with an offline company, the website serves to give you extra or preliminary details about it.
Go ahead and check:
For registration details: Look up the website’s registration details on the IICAN site using their who.is command into which you will type the company’s website URL.
This will display geographic location, website’s registration and expiration date, name, email, address, contact number about the person who registered the website.
You can then use these details for further research.
If you find the owner is paying to hide his name, identity or address, then be gone, as it is most likely a phony business.
If the company is registered to an LLC company, then look them up on the web and see who runs it. If they are located offshore, then say goodbye too. If they are in the SEO or hosting businesses, do not use them. If it is a phony PO address, turn your back on them.
These phony business sites or “referral sites” are set up solely to get your lead which they sell to a real business.
For new or about to expire domain: By completing a simple ‘WHOIS’ domain check, you can also tell if a website has been recently registered. The UK’s domain registrar Nominet has a WHOIS lookup service on its website.
Look up when the website was created and when it will expire. If it was only created recently and will expire soon, that may be a red flag of the website being used as a temporary cover for a scam.
For discrepancies and lack of professionalism: Go through the website for the company’s ideas and goals. If they say one thing at a place and contradict it at another, then they may be a scam, as the website may have been hastily put together without any coordination.
Another thing to check for are copied content, stolen images (remember, we said the ISO logo can be copied by unscrupulous people?), and numerous spelling mistakes. All these go against business etiquette. Genuine companies would not be so lax. But scams often put little thought or care into their websites. So, try to avoid them.
If you notice poor English used repeatedly on a website, that may belong to someone out to cheat. Please, run!
If the company you are going to deal with says it is in the UK, match up their website’s company name and registered address with the records on Companies House’s free Web Check service. There, you can check lots of information about a registered company, including when it was formed.
Stock photos and lack of photos of a company’s building, employees, or products are a major tip-off. If all you see are stock photos of their “products,” then you’ve got a fake web business! Hands off, please!
For refund and exchange policy: If you are going to purchase something online, be sure to check the company’s refund and exchange policy to know the steps to take if the products don’t match the description or sample, or should something else go wrong.
For same business page for another city: Use your same search term with a name different from the city name the company displays. If you find the same business page for another city, back out.
Usually these business pages are just copied templates used in many cities. Many have broken links for images and links which is an indication that you are dealing with a phony phishing business page.
These phony sites are usually set up by an SEO expert and duplicated for many large cities. To prevent you from tracking it, they almost always use form email.
To fool unsuspecting people, all these fake businesses use a P O Box address or pay for a piggyback on a real company that does business close to the same business. And when you do a look up, the type of business will match but thank God the name will not.
For the legal WebPages: Legitimate company websites feature a Terms and Conditions webpage. If it is available, read it carefully to see if anything looks suspicious.
Don’t forget to check a company’s website for the Contact page. For online businesses, the law requires the owners to provide registered company contact details.
Also, check if other official WebPages, such as Disclaimer & Disclosures, etc., are available.
For the configuration of the payment gateway: This is where the scammers get unsuspecting people. So, before entering your payment details, check for https:// at the beginning of the URL and make sure that a padlock or key symbol is displaying on your browser.
Avoid paying online companies you don’t know well with your bank account details. It’s what scammers look for most so that they can clear out your bank account. Better pay with your credit card (and make sure to pay it off at your next statement date). Best, use Paypal which can get you a refund if things go wrong.
To conclude this section, know that now it’s very easy to set up an expensive- and professional-looking website that has all the trappings of trustworthiness. Therefore, before dealing with an online business, you’re advised to check more than its website.
4. Check the Company’s Payment Methods
Anyway, if you have any doubts about a company after checking its website, your instincts may be right.
So if you’re wondering “how do i know if an online company is legitimate” before giving it your money, another check you may carry out is the company’s payment methods.
Consider how the company accepts payments: If a company only accepts payments through insecure or shady means, that could be a red flag. As said above, secure modes such as PayPal, Maestro Card, Moneybookers, Neteller, SolidTrustPay etc. are considered the safest methods of payment in online transactions. So look for payment methods which will allow you to get your money back should things go sour.
5. Seek Feedback about the Company
Another way of how to find out if an online company is legitimate is to seek what others say about the company. Check in the search engines, ask your network, seek a referral, check testimonials, check in the community, check customer reviews on review platforms, verify endorsements, check credit reports, and check Trading Standards.
Check in the search engines: Plug the company’s name or the name of the person representing the company into a search engine such as Google.
Some reviews, or information, on whether the company is scam or not, may turn up. If you don’t see anything worth checking, try combinations like “Is company X scam,” “Is company X legitimate,” “Is company X genuine” and see which results turn up. You may even uncover previous warnings from disgruntled customers or from some authorities.
Although the company may manipulate to have one or two positive search results, the negative ones will easily drown them if the company is not legitimate.
There may also be search results on forums where someone speaks of their bad experience with the company or warns against dealing with them.
What is said on forums isn’t the gospel truth, but it can be a good enough indication as to whether a company is worth dealing with or not.
On the other hand, a search may return results showing the company in a good light which is an indication that they are legitimate.
You may also copy the acceptance email sent you and paste it into a search engine window. If the company is fraudulent, there no doubt will be returns with complaints and warnings from people who have been scammed by it.
Ask your network: Ask your friends (in real life and on social media) and family members if they’ve had any dealings with the business and if they’ll recommend it or not.
Seek a referral: You could also contact an industry body or association for a referral. Often the industry associations will have a list of members on their websites.
Check testimonials: Although testimonials aren’t 100% foolproof, check to see if the website lists any from satisfied clients or customers. Do they sound genuine? Will the company allow you to contact some of them?
Still be careful, as scammers can direct you to some of the members of the scam group!
Check in the community: To find out if a company has a good reputation in the community, ask for real bricks and mortar references in their area. Call the references to find out who really did the work. If it was a different company, then it was contract services from another company they sold the lead to. This is an indication to avoid the company.
Check customer reviews on review platforms: Contrary to personal blogs where the owner writes the review to promote a product/service/company, review platforms carry the opinions of various customers and usually provide an unfiltered view on a company’s overall reliability. Serious review platforms will not censor reviews at all but rather will fight hard against fake reviews.
Verify endorsements: Companies often proudly list standards they have achieved or awards they have received. Scam companies could do the same to snare you. Your duty therefore is to check any such details from the sources. Make sure they are credible!
Check credit reports: Checking a company’s credit report using any popular online tool will give you details about the company’s credit score, financial performance, director structure, contact details and other important details like how long they have been trading, etc.
Also, if you have been duped by an online or offline company, it is a good idea to contact these Government backed bodies. If for nothing at all, informing the authorities could save others from being scammed too.
6. Visit the Company’s Office
If time and distance permit, don’t hesitate to approach the company in person. Profit to check original copies of their certificates, awards, company registration, etc.
But if you are about to enter into a big deal with the company, you’d better hire an advocate to verify all the documentations.
7. Trust your Sixth Sense
After having done several checks, if you are still undecided about working with a company, the best piece of advice is to simply go with your gut feeling about the company. If your better self tells you to go ahead, don’t hesitate to do so. But should you harbour any suspicions or should you feel uncomfortable dealing with a particular company, the best thing will be to keep your distance.
8. More Pieces of Advice
• 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.
• 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.
• Some hosts keep the information of the domain owner private. This does not necessarily mean it is a scam.
• If you’re unable to find sufficient information on a company, don’t be afraid to ask around. (try business rating sites or related and post on their forums about the company)
• If they have a phone number, call.
• Try and stick with popular, proven on-line businesses.
• Does the merchant have a brick-and-mortar store? If so, it is more likely to be legit. If possible, visit the store once.
• Be careful with your information. Don’t provide any more than is necessary, and use good judgment when giving it out. If you don’t feel 100% sure that the company is genuine, then find another one! With personal information that could ruin your life, it’s better to be safe than sorry.
• If it sounds too good to be true, assume that it is.
• Some tools may not be available for things outside of America.
• People have been scammed out of millions. Be careful.
• Remember to research any company before you invest money or purchase goods from them. Do this before giving them any personal information also.
• Watch out for instant money schemes, as the majority of these tend to be scams, or schemes where only a few of the participants actually get rich.
c. More ideas
• Only deal with people in your area.
The best way to avoid scammers is to deal locally, with people you can meet in person. Scammers will often contact you from another country or somewhere far away, asking you to ship the item you’re selling.
• Don’t wire funds (Western Union, Money Gram, etc.).
If you’re asked to wire funds, you’re talking to a scammer.
• Beware of fake cashier’s checks and money orders.
Scammers will often send you a fake cashier’s check valued above your asking price. The scammer will then ask you to wire the over-payment back to them. Your bank may even cash this check, but when it’s discovered that the check is fraudulent, you will be held responsible by your bank.
• Beware of identity theft. Don’t share your private info.
Identity theft is one of the fastest growing crimes in the United States. Don’t give out bank account numbers, passwords, mother’s maiden name, date of birth, place of birth, credit card numbers, social security numbers, or any other personal information.
• Use caution when accepting relay calls from the hearing and speech impared.
Relay calls are a legitimate service for people with hearing and speech disabilities. However, scammers often use this service to contact you, pretending to be deaf. Remember to deal locally, with people you can meet in person.
• Avoid shipping and escrow.
Scammers commonly employ fake, online escrow services.
• Avoid deals that are too good to be true.
Scammers try often to post fake ads, selling items that are significantly underpriced. If you see any of these fake ads, please report them by clicking “Flag abuse or spam” in the ad.
N.B. : This information is from accc.gov
Not all traders are genuine
Some consumers assume that all traders are legitimate because they are approved and monitored by the government, but this is not true. While there are rules and regulations about setting up a business or company in Australia, authorisation to operate does not guarantee honesty. Some traders may even pretend to have authorisations or licences that they do not have.
Business cards, registration numbers or other forms of identification do not necessarily prove that a business or trader is legitimate.
If you are in any doubt about the credentials of a business or trader that you are dealing with, do some research and verify any information they provide. If you are not satisfied it is better to deal with someone else.
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Your personal guide to securing your future online