In addition to connecting people worldwide, the internet has made conducting business easier than ever. Payments can be made swiftly through the payment portals that are too easily accessible.

However, with the explosion of online businesses, it has become quite challenging to know if the business is genuine or not. It is quite common for many people, and “How to check if a company is legit?” is a common concern since many scammers understand that they can also con someone through a bogus website.

Since most business deals occur online, it becomes increasingly important to decipher if the person on the other end is genuine or a fraud. Thus, it becomes critical to spot fake business opportunities rather than fall victim to them.

According to the Federal Trade Commission (FTC), US citizens on average lost $7.7 thousand in 2023 compared to $5 thousand in 2022 to investment scams. Additionally, according to the report, US citizens lost $10.2 billion to various online frauds in 2023, as opposed to $8.9 billion in 2022.

How to Spot Fake Businesses Online?

It has become challenging for the regulator to regulate any business online. Due to its sheer number, the regulators find it quite challenging to keep an eye on any fraudulent website. It becomes easier for consumers to report fraudulent activity than for these regulators to maintain strict vigilance.

There are higher chances of someone falling victim to a fraudulent business deal than finding a genuine one. However, if you are vigilant enough, you can avoid falling for it. We have highlighted common red flags that can alert you to an impending scam.

Signs of a Fake Business

When you approach any website with suspicion, the chances of deciphering if it is legit or bogus become quite apparent. When you are faced with a business opportunity or buying some products online, you need to take these steps so that you can avoid falling victim to it.

Website

Since most businesses have a web presence, it is a good place to start deciphering if it’s a fake business check.

Spellings and Grammar

If a firm claims that it originates from the UK or the US, has an offshore business, and has poor command over the English language, it is a sign of a scammer. Scammers have a poor command of the English language. If you find consistent spelling, grammar, and punctuation errors, then you can be sure that it’s a scam.

Business Address and Landline Numbers

To attract more customers, it is normal for every business establishment to have a physical address with a landline number mentioned on the website. Try calling the landline number or client support number to get an idea about the business. It is also advisable to check the location on Google Maps. You could call up the neighboring firm or establishment to verify if the said business does exist.

Terms and Conditions

Before entering into any kind of deal, it is better to understand company policy. Scammers are known to have ambiguous company policies. If you are still inclined to enter into a deal with them, contact your local certified public accountant and understand the deal correctly. A word of caution: such policies also have hidden charges levied, so it is better to understand what you might face in the future when you enter into the deal.

Certificate of Regulation and Licence

Every business has a certificate of being regulated and licensed to run the trade by the government or a reputed private agency. Fake businesses do not have certifications to show. A legitimate business will always show these certifications on its website.

Cross-verify if these certifications are valid or not. Scammers are known to run their business operations without a valid license. Reasons may vary for being blacklisted or for any other financial fraud, yet they boast these certifications.

It would be good if you researched these firms and cross-checked if they are under any litigation or are blacklisted before entering into a deal.

As the laws of states differ from each other, check if the business enterprise has jurisdiction to practice their trade in your state and country.

Review Section

It is advisable to research the firm you are interested in. Check for online reviews for the said company; this will give you a good idea of how they conduct their operations and how satisfied their clients are.

Company’s Existence

If you have a business opportunity, check if it is listed with the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). If the investment company offers names of companies that have been performing very well but that you have never heard of, then try to check their legitimacy by cross-verifying them on the FINRA and SEC platforms.

Products and Services

Beware of fake businesses that promote fake products and services. You can check the legitimacy of the business by researching it online. Try to gather as much information as possible before you commit your financial resources. Ensure the company is trustworthy, and to confirm it, you need to do a background check while maintaining a lookout for any fraudulent activity. If your gut says no, then do not pursue the matter any further. Look for a different business opportunity online.

Management and Employees

Every company has top management and employees to run its operations. Try to look up social media platforms like LinkedIn. Cross-verify if these are the same employees and top management who are working at the firm that is offering you business opportunities.

Company Credit Score

It might surprise you, but even companies have a credit score. Dun & Bradstreet, Equifax, and Experian are the three companies that analyze and evaluate the creditworthiness of a business. These companies give a credit score similar to an individual’s. They have special parameters that will evaluate if the financial health of a particular company is good or bad.

These ratings allow anyone interested to conduct business based on these reports. These reports can be purchased from these business credit rating agencies.

Final Thoughts

The entire world works on monetary transactions; you require money in your daily activities. Money is a limited resource, and the amount you earn through your job or business is also limited. The government offers lucrative opportunities to individuals to enter financial markets to make money. Thus, it is your responsibility to verify and authenticate the business opportunity.

While buying any product online, you have solely to depend on what you have been shown. Thus, before you start to commit your financial resources to it, it is a good idea to research the said company.