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How to Determine if a Business Is Legitimate

Whether you plan to buy a product from a company, invest in its products, or use its services, determining whether it is legitimate is imperative. A thorough authenticity check can help you identify red flags early on, thus preventing financial and business losses.

These days, anyone can set up a website and start promoting their product, so you should do your due diligence beforehand.

How can you find out whether a business is legitimate? What are the signs of a shady company? How can you avoid becoming a victim of a scam?

1. Check the Company’s Registration Status

Every country has an organization responsible for registering businesses. Upon registration, the registration data of a company becomes publicly available, allowing anyone to access it. If you suspect a business you’re dealing with isn’t legitimate, checking its registration status is an excellent way to confirm it.

Find out what country the business operates in, find an organization that deals with business registration there, visit the organization’s website, and run a search for the company in question. If you are unable to find any information about the company’s registration, you might be dealing with a scam. If the company is registered, find out how long it has been in business.

2. Check the Company’s Operational History

The fact that a company is registered does not mean it is entirely legitimate. Shady businesses usually register and leave the scene after only a few months of deceptive practices. Thus, knowing how long a business has been around can further assist you in deciding whether to trust it.

Check WHOIS Lookup of Shein Website

To determine the domain registration date, go to the WHOIS website or other websites to find WHOIS information and search for the domain name. If the domain was registered long ago, it could indicate that the business is reliable and trustworthy. However, if the business is just a few months old, you shouldn’t put your trust in it.

3. Check If the Business Has a Physical Office

Having a physical office demonstrates the seriousness of the business owners, thus strengthening their credibility and legitimacy. Hence, you should verify whether the company you intend to do business with has a physical presence.

Look for the company’s address on its website. If you find it, search online using the business name and address to see if any listings appear. If you fail to find the company’s listing anywhere, that’s a red flag since most businesses register online these days.

Check Business Listing in Chrome

In this scenario, physically visit the address listed on the website or contact any nearby local business to ensure that the address provided belongs to the same company.

Note that no business needs to have a physical office to prove its legitimacy. There are plenty of online stores with staff that work remotely, not in one physical location. However, the presence of a real-world office certainly adds to an online business’s legitimacy.

4. Check for Discrepancies on the Website

Short-term businesses that only aim to defraud people don’t invest much in website design and development. They mostly scrape content from other websites and sources and put it up on their website to save time and money.

Therefore, looking for errors on a website, such as grammatical mistakes, references to other companies in the privacy policy, and vague terms and conditions, can help you identify a shady business.

If you spot signs of an illegitimate website, this should trigger the warning alarm that you should stay away from this business.

5. See What Others Are Saying

Checking the feedback of recent buyers can also provide you with an insight into how trustworthy the business is. Look into the business listing and find out what others have to say about their experience. You can also check reviews about the company on trustworthy review sites like Trustpilot.

Check Reviews on the Google Business Account

If reviews are positive, that indicates the business has a good reputation among buyers, so you can confidently engage with it. However, if the rating is terrible and recent buyer reviews are primarily negative with many complaints, you should stay away from it to avoid any future troubles.

If you don’t find any reviews about the business online, the company is probably brand new. Therefore, it would be unwise to engage with it.

6. Look at the Refund Policy and Accepted Payment Methods

Authentic businesses often accept the widely accepted payment methods. If the company you want to engage in requires you to pay with cryptocurrency and does not accept credit cards where you can quickly get a refund, it is likely being operated by scammers. Therefore, it seems sensible to stay away from it.

man holding credit card typing on laptop

Likewise, legitimate companies offering valuable products and services offer a clean refund policy. This allows buyers unsatisfied with the product to get their refund timely. If you want to engage with a business that doesn’t offer refunds, be aware that it might be a scam.

Given the sheer size of the audiences across social media platforms, they are the primary target for most businesses. For a business to reach the most potential clients, it must have a solid social media presence.

Photo of mobile screen with social media app icons

Most trustworthy companies are active on social media. So, if the business you want to deal with operates online but doesn’t have any social media accounts, that could be a major red flag. In contrast, a company with a strong social media presence and a huge following is likely reliable (though this isn’t always the case).

8. Consult a Professional

If you are still suspicious about the business and its operation, and the available information is insufficient to confirm its legitimacy, you should consider hiring a professional background check service to conduct the investigation.

Professional services give you a much more in-depth understanding of the company and its operations, particularly its financial situation and business model. Having this information can help you figure out whether you can trust the business or not.

However, depending on where you live and how intensive the check is, you will likely incur a substantial service fee.

Only Deal With Reputable Businesses

Confirming the legitimacy of a company before doing any business is crucial to protect yourself from losses in the future. Hopefully, you now have a better understanding of what to look out for when verifying the authenticity of a company.

Don’t deal with a business unless it is legally registered, has a solid track record of operations, and has a good reputation. If not, avoid it and look for a reputable alternative.


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