Thanks to the internet, anyone from anywhere can find a company for their needs. However, this accessibility also paved the way for some problems. In this post, we will talk about one of the major issues of the internet: Fake companies. It is possible to see their prevalence in the news as well, let’s give a recent example. According to ctpost, imposters had used a business’s name and address to create their own websites to con customers. It is possible to come across several news like this every year but it is also possible to avoid these scams. So, we will mention how you can use the internet against these threats.
How to Verify a Company’s Legitimacy Online
Check Business Registration and Licensing
The first thing you should do is to check their business registration and licensing. In order to find these, you should search national registries such as Companies House and SEC. Then see whether the company name, ID, status and incorporating date match or not. In this part, we consider not listed and mismatched data as red flags. You can take the first step the see if a company is a scammer or not...
Review the Company’s Website
The next step is about the company’s website. First, look for domain registration in order to find out their age and ownership, legal pages and SSL (“https”). Then, ask yourself questions such as: “Does the website look professionally designed?”, “Is information on the website correct and well-written?”, “Is there a privacy policy/terms of service?”, “Do the links work?”…
Search for Online Reviews and Complaints
You can use websites such as Trustpilot, BBB, Google and SiteJabber. Even though comments by bots and generic reviews are very prevalent, it is possible to differentiate fake ones from genuine ones. They may be written in similar tones, they may sound extremely robotic or they could come from recently created accounts. However, these are not the only warning signs you should be looking for. If the responses to refund/delivery complaints are lacking, this makes one big red flag. Several authorities have been taking deterrent measures for this. For example, last year FTC announced a rule that aims to prohibit the sale of fake reviews and testimonials, as well as seeking civil penalties.
Analyze the Company’s Digital Footprint
Companies usually use several social media platforms such as Linkedin, Instagram, Twitter and Facebook. If they do and appear active on these, this is an important indicator of their legitimacy. However, this is not enough to reach a conclusion. You should also look for verified profiles and active employee presence.
Confirm Contact Information
Contact information can also give away a lot. See if the company listed a real office address and verify this address with Google Maps. Aside from its location, you can test phone numbers and e-mails to see if you can get a real-time response. Disconnected numbers and unprofessional-looking e-mails can be indicators of fraud. Also, a website lacking any contact information or solely having a generic contact form, is not a good sign.
Check for Legal Disputes or Blacklists
You can access several official databases, such as OFAC, UN, EU sanctions or court databases. If the company is in these lists or fraud registries, it is a sign of danger.
Use Verification Tools and Databases
Among the tools you can try; OpenCorporates for global business registries, ScamAdviser for website trust analysis, and WHOIS Lookup for domain ownership and age. Through such databases; you should check the domain creation dates, registration transparency and ownership data. If the domain appears to be new or the details are anonymized, it’s no good.
How Sanction Scanner Helps You?
Sanction Scanner’s solutions involve screening companies and individuals in real-time against sanctions, PEP check (Politically Exposed Persons), adverse media and Know Your Business. This way, you can spot any fake ownership, virtual office scam, or legal risk even before you start onboarding. This is very important because it is impossible to know where hidden/complex ownership structures, shell companies and high-risk associations may come up.
Red Flags That May Signal a Fraudulent or High-Risk Company
You may see a company that advertises decades of experience, just to find out they are just incorporated. This is one of the major indicators of fraud that you can come across. You must check all of their details, from domain registration to customer reviews in order to be sure everything is consistent. As we have mentioned before, details regarding their ownership may give some hints about the company’s legitimacy. Sometimes this may come up as no clear ultimate beneficial owner (UBO) or using offshore entities to obscure control.
Also, the address information can reveal a lot. There can be multiple unrelated companies registered at the same location or, simply they may not have an address at all. Moreover, fraudsters are known to push clients to make transactions immediately. If they insist you on making a decision rapidly, or offer deals that are “too good to be true”, you should reject these immediately. A reliable company would give time for you to review the details and make a sound decision.
When you ask legitimate firms to provide incorporation certificates, licenses, tax IDs or information about their UBOs, they usually provide you with the details but illegitimate companies may avoid these, provide vague answers or straight out refuse.
How Can I Verify a Company For Free?
Luckily, there are several resources that you can benefit from. Most countries have online databases that you can look up any company information in detail. For websites, you can check when was the company’s website created and other details on WHOIS. There are also tools such as ScamAdviser, ScamAnalytics which analyze websites for trustworthiness based on several metrics such as domain age, server location, traffic patterns etc.
What Are the Signs a Company is a Scam?
There are several indicators such as a newly registered domain, no contact info, hidden or complex ownership, poor online presence, unaddressed negative reviews and complaints, generic website, multiple companies at the same address, unrealistic claims, demanding upfront payments…
FAQ's Blog Post
You can verify a company using business registrations, WHOIS, and ScamAdviser. For a professional verification process, discover the professional services of Sanction Scanner.
Some of the most common signs are newly registered companies, suspicious WHOIS data, a poorly designed website, lack of contact information and address.
You can trust the SEC EDGAR database or state-level registries (for US), Companies House (for UK), and Ticaret Sicil Gazetesi or Trade Registry Gazette (for Turkey).
Not necessarily. Even though they indicate some activity, they can be easily manipulated. We recommend that you use other tools of assessment. We can help you with this with our professional verification process. Do not forget to check out our professional services at Sanction Scanner.
Tools such as OpenCorporates, Sanction Scanner, and KYB services provide detailed information about a company's legitimacy.
