When it comes to trusting businesses—especially, banking institutions—we aren’t the most convinced. A Gallup study revealed that 60% of Americans suspect widespread corruption in the business sector, and 20% had little to no faith in banks. For many of us, this means we are visiting storefronts and making online purchases with one eye open. Past experience from the housing crisis of 2008 and big-name scandals puts our suspicions into perspective. It makes sense to be wary of signing that home loan. But to assume your neighborhood market is a front without research or knowing what to look for is only hurting your shopping experience—and perhaps spreading some misleading information about the business along the way. To prevent this from happening, here are some signs that you may be dealing with a corrupt business. (Plus, why you need to conduct an Alaska Secretary of State business search.)
1. Business Fronts for Money Laundering
From the store on the corner you never see a customer walk into to the car wash two blocks down, these businesses could be just that: businesses. Or they could be fronts for money laundering schemes.
As consumers, without access to the books and records, we probably will never know (and, let’s face it, the probability of a front is few and far between). However, on the off chance that you are dealing with a corrupt business engaged in money laundering, here’s what you need to know.
First, What is Money Laundering?
In a nutshell, money laundering is a way for criminals to disguise illegal income made from criminal activities. On the books, the cash is shown to have (innocently) come from a registered, legal business versus the actual (illegal) source.
How Can You Spot It?
Questionable bookkeeping with spotty transactions and unverifiable documents are signs of suspicious activity. Also, large investments that seem to have no connection with the (supposed) legal business is a red flag. Employees and those on the inside of the business will have an easier time seeing these signs versus consumers on the outside.
What consumers can be aware of is the evasiveness that goes hand in hand with money laundering, if not other suspicious business activity—like identity theft. If you are being asked to give very personal information (i.e. social security number, credit card information, address, etc.) or sign a document you aren’t sure about, ask the employee why they need this information. Vague answers could be a sign that the employee either doesn’t know or could be hiding the real reason.
2. Questionable Fees
The Wells Fargo scandal is every business bust consumers should be aware of. In 2016, Wells Fargo employees were caught creating fake bank accounts for real customers so they could hit sales numbers. Several of the accounts were cancelled soon after they were created, but some fell through the cracks. Unbeknownst to the real members, some would receive questionable fees they had no clue about, which then eventually lead to the real reason behind the fees. Members were paid back and Wells Fargo still faces financial and reputational repercussions.
While this type of business scandal is rare, it doesn’t hurt to keep track of transactions and pay attention to questionable charges and fees. Worst case, call your banking institution to verify the transactions and fees. Small transactions especially could indicate identity theft; the sooner it’s identified, the sooner it can be put to a stop (and the less hassle you’ll have to go through).
3. Suspicious Online Reviews
Around 67%of reviews affect purchasing decisions. This goes to show how powerful reviews are, and the amount of money consumers risk if they are fake. In general, if there is an overwhelming number of 5-star reviews with little to no 1- to 4-star ratings, you want to be suspicious. This could be a sign that the company hired fake reviewers or pressured their staff into “reviewing the business.” On the other end of the spectrum, as you can expect, too many negative reviews imply a faulty business reputation and poor customer experience. In which case, scam or not, it’s best to avoid that company.
Here’s What the Real Problem Is
What the real problem is is that professional fake reviewers (unfortunately, such a job position does exist) are experts at posting varied reviews of company products and services on review sites. This makes it harder to differentiate between what’s a genuine review and what’s not. Ways for consumers to tell the difference include checking the date the review was posted (a high number of positive reviews on the same day imply suspicious activity) and check on other review sites to see if the reviews match up.
4. Website Domain Was Just Registered
The e-commerce market is on the up and up, generating roughly 360 billion dollars in 2016. It’s estimated that these figures will only rise in the upcoming years. And, because of the healthy market, we can only expect to see more e-commerce stores pop up online. Out of the hundreds that are legitimate, some questionable sites are bound to show up.
What Can Consumers Do?
One way for consumers to see if the site is a scam is to copy and paste the URL into Whois.com, which lists the domain registration date, domain expiration date, updated date, and registrant, administrative, and technical contacts. If the registration date is fairly recent or less than a year ago, the site may be a scam (or they could very well have just started up). In any case, this is reason to conduct more research. Consumers can also copy and paste the URL (and various pages) in Google’s Transparency Report to see if there’s signs of malware and phishing on the site.
5. No HTTPS in the URL
Another indicator that something may be up is if the business website doesn’t have HTTPS at the front of the URL. HTTPS, otherwise known as hypertext transfer protocol secure, makes sure communication between the browser and server is encrypted. In other words, the website is protected and has passed some guidelines, which makes it more likely it’s legitimate. While not having a secure encryption is not a guarantee that the website is a scam, it’s a warning to consumers to not give their personal information away—especially if the purchase page is not encrypted.
6. You Have a Gut Feeling
Even if everything seems to add up, if you have a gut feeling about a business, listen to it. According to Fast Company, scientifically speaking, your insula and amygdala (parts in your brain) are responsible for producing this “gut feeling.” Further studies show that these “gut feelings” are faster than rational thought. While business decisions should not just be based on gut feelings but a combination of gut and hard research, consumers and employers alike should not ignore it. You never know; your gut feeling could prevent you from giving your personal information to an illegitimate business.
7. Amount of Personal Information You Have to Give Doesn’t Add Up
It’s become common for businesses to ask consumers to enroll in their rewards programs—or credit card services, if it’s a major retail company. Oftentimes, this means the consumer gives their name and email address in exchange for a free rewards membership. Consumers provide more information (i.e. name, address, social security number, salary…) if they’re applying for a company credit card.
In general, if you’re applying for a credit card from a Fortune 500 company, they have a track record proving their legitimacy, and you’re in the green. However, if a relatively unknown retail store asks for your personal information for a credit card, you might want to hold off and do some research.
As for rewards programs, red lights start flashing if the store asks for more personal information than your email address and name. It is especially suspicious if they want your social security information, especially since you are only becoming a rewards member. Err on the side of caution and don’t ditch the rewards card; the risk—especially when it comes to giving over your social—isn’t worth it.
While most businesses aren’t corrupt, being proactive in protecting your personal information doesn’t hurt. If you do suspect suspicious activity, contact the local authorities who will direct you to the appropriate personnel. Specifically, for frauds or scams, contact the Federal Trade Commission (FTC) or report the fraud using Online Complaint Assistant located on the FTC website. Have any more tips to add? Have you come across a questionable business? What did you do? Leave a comment.
Considering Conducting an Alaska Secretary of State Business Search?
What about a Delaware business entity search or Hawaii corporation search? Sec States, an easy to use database of secretary of state pages, can help. Within a couple of clicks, you can access the California secretary of state page and conduct a New York entity search in a matter of minutes.