In today’s global market, many of us may be caught off-guard by the concept of a rogue, black market business. But it’s becoming more common, especially online or in the case of counterfeited products and fake brands imported from other countries. There’s a surprisingly thriving underground market in just about any expensive commodity you can think of, from knock-off purses to counterfeit collectible playing cards to fake brands of vape cartridges.
Along with this, there may be run-of-the-mill shady businesses in your town which are operating fraudulently. It’s actually pretty easy to run a background check on a business of any size. Here are a few steps to take:
Check with the government first
Every business has to be registered through some kind of government regulating agency or another. Your first stop should be the Federal Trade Commission (FTC). Depending on the type of business, there may be other regulating agencies to check with as well. For instance, law firms are regulated through the American Bar Association, or financial firms through the Security and Exchange Commission.
Check their website
Running a scan on a website through a service such as Netcraft will tell you things like how long the site has been operating, who registered it, the web host operating it, and so on.
Check their corporation
Not all corporations are big; some are just LLCs (Limited Liability Corporations) which can be registered in some states for a few dollars. A site like Corporation Wiki can tell you some details about who owns a company and its connections. You can get into subsidiaries and holding companies linked together, which might tell you who to really hold responsible.
Get a business credit check
The same credit reporting agencies that report on individuals also keep records on businesses. The big three are Experian, Equifax, and TransUnion, any one of which will likely have information on a business. Business credit checks work just like individuals, showing up liens, lawsuits, defaults, bankruptcies, and other financial activity. An additional resource just for businesses is Dun & Bradstreet, a New Jersey agency that specializes in business background checks. They are geared mainly towards investors.
Check social media
If you suspect that a company has had others complaining about it before, you can search for reviews of that company online. If you find substantial complaints of scams, frauds, or plain bad business, this can be a lead to more evidence. However, be wary of taking the Internet’s word for it without digging in a little to see if the claims have basis. Somebody with a beef against a business could always try to smear them. Also avoid business rating services, as they’re frequently pay-to-play shakedowns themselves.
Check the local records
For businesses with a physical brick-and-mortar location, your options to investigate them include property records searches, state licensing agencies, or the Chamber of Commerce. Depending on the business there might be a trade union or local business directory, such as a real estate firm listed through the Real Estate Investors Association. One prudent measure is to search the records at your local newspaper since any stories about conflicts, legal actions, or other newsworthy events would show up there.
What to look for
Unlike running a background check on an individual, a background check on a business can reveal worrying results in two ways: a troubled history, or no history at all.
In cases where there’s evidence of past conflict, it’s grounds for caution, but don’t automatically assume that it’s the business’ fault. They might have been the target of frivolous litigation, or been hit by a disaster right during their formative years, or simply hired personnel who left them with a bad record. Life isn’t always fair, even for businesses.
However, the business that comes up as a blank slate, with no records, licenses, or registrations anywhere, is an even bigger red flag. That can be a sign of fraud, organized crime, or the proverbial “fly by night” outfit running a scam. It’s nearly impossible to legally conduct commerce and not leave some kind of record, so no record is the worst kind of record.