It can be quite challenging to verify a company’s legitimacy and to understand its risk factors. As fraudulent transactions are becoming more common, we recommend that you do not forget to make your search before you shop online or decide on a business partnership.
What Are the Red Flags of a High-Risk Company?
● Seemingly new companies with a long history of financial transactions
● Complex and unusual corporate structures
● Virtual offices or shared addresses with various companies that are not related to the declared business
● Putting pressure to decide quickly or requesting payments before finishing the project
● Lack of transparency in UBO data
How to Check If a Company is Legitimate?
1. Check Business Registration and Licensing
Verify through Official Registries: You can find out if a company is legitimate by using online official records that are open to the public. Some of these sources are Companies House in the UK, the U.S. Securities and Exchange Commission (SEC), and Ticaret Sicil Gazetesi in Türkiye.
How to Perform This Check?
● Government databases provide a significant amount of information for you to verify the legitimacy of a company.
● Remember to check these key details: The company’s full name, registration number, date it was set up, current status (e.g. active, inactive, or closed).
● The last step is to compare the data you have gathered to the information stated on the web page, business emails and their contacts. Make sure every single detail matches.
Red Flag: Watch out! If you cannot find the company in the official sources, it indicates that the company is not legally operating.
2. Review the Company’s Website
Look For Professionalism and Compliance: A legitimate company should have a professional website with relevant information. We have listed some crucial elements for you to assess the credibility of a website:
Domain Name: The use of a custom URL (e.g., www.companyname.com) and a legitimate email address (e.g., [email protected]) is a sign of professional business. If you see a generic email address, specifically one with Gmail or Yahoo, this can be a red flag.
Legal Pages: Do not forget to check out important links, including Privacy Policy, Terms of Service, and a clear Return/Refund policy.
SSL Certificate: A secure website should have an URL starting with “https://”.
Red Flag: Watch out! If you see a poorly designed website both in content and visuals, it is a sign that the company is not credible.
3. Search for Online Reviews and Complaints
Explore Third-party Review Platforms: Check how a company handles complaints on Trustpilot, Better Business Bureau (BBB), Sitejabber, Google Reviews, or Şikayetvar.
What to Look For?
Good Reviews: A legitimate company receives good comments by satisfied customers.
Handling complaints: A company to trust knows how to handle if there is any negative commentary.
Red Flag: Watch out! If the company does not seem to know how to handle good and bad feedback, then it is a red flag.
4. Analyze Company’s Digital Footprint
Review Social Media and Professional Platforms: If a company is consistently active in social media, then this means it is reliable.
Steps to Verify
Check the company on social media platforms.
Its employees should have professional LinkedIn profiles.
Red Flag: Watch out! If an inactive company or a company with many followers with no engagement, it is a red flag.
5. Confirm Contact Information
Verify the Business Address and Phone Number: Google Maps and Apple Maps are applications you can benefit from. We also recommend that you call the company and see if its employees sound professional.
Red Flag: Watch out! If there is a contact form on a company webpage and it does not have important details like an address or a number, then the company can be suspicious.
6. Check for Legal Disputes or Blacklists
Review Official Sanction Lists: If you are heavily involved in international dealings, then you have got to be extra careful. Try checking the selected company in the sanction lists. Use court case search tools, the U.S. Office of Foreign Assets Control (OFAC), EU Sanctions List, and United Nations.
Red Flag: Watch out! If a business is on a sanctions list or has legal problems that are not resolved, then its reliability is at stake.
7. Use Verification Tools and Databases
Leverage Specialized Verification Tools: Some of the sources you can use are Whois Lookup, ScamAdviser, and databases like OpenCorporates.
Key Benefits of These Tools:
It is easy to see how long the company has been active. Do not forget this: Scammers often have newly created websites.
Checking WHOIS data can be another solution.
Red Flag: Watch out! If a company is only recently registered online, then this should make you question its legitimacy.
How Can Sanction Scanner Help You?
You might want to engage a new business partner or find clients. Legitimacy can be a real issue here so do not forget to verify them first. Our professional Sanction Scanner team makes sure you have a legal agreement with a business or customer. With our up-to-date screening technology and professional tools, we find hidden risks and minimize the possibility of any illicit activity.
Sanction Scanner has the right tools to measure risks in real-time, signal risks, and provide detailed reports.
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.