Q:

How do you confirm that a company is legitimate?

A:

Quick Answer

To find out if a company is legitimate, search for it in a reliable third-party database such as those run by state business filings or the Better Business Bureau. In cases where this is not possible, verify details such as the company's physical address with third-party sources.

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Full Answer

Other contextual clues that help determine a business's legitimacy are its sales practices, which forms of payment it accepts and its refund policy. Requiring customers to use payment methods that are difficult to trace or refund is a common tactic used by scam companies. Money orders sent via mail are one example of this. Heavy pressure to invest or purchase as quickly as possible is another red flag that indicates a possible scam. Internet searches, scam-tracking sites such as Scambusters, and reviews from consumers or employees of the company are additional sources of information.

Determining the legitimacy of a business is not always possible. When doing business with a company of questionable legitimacy, take steps to minimize the risk. Paying with a credit card is a safer way to do business with an unknown company; the Fair Credit Billing Act protects consumers from monetary liability when credit card purchases are scams. The Better Business Bureau also recommends that customers protect personal and banking information from unknown companies.

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