With sophisticated cybercrime on the rise, due diligence and compliance enforcement are no longer considered a hassle for businesses; instead, they are being prioritized as a core business concern by corporates, and for good reason.
Finds from PwC’s 2022 survey reveal that 46% of surveyed organizations reported experiencing fraud, corruption or other economic crimes in the last 24 months. The survey of 1,296 executives across 53 countries and regions found a rising threat from external imposters.
So how do businesses stay safe in the face of a growing risk of being duped by phony companies? Here’s a list of 5 measures you can take to reduce this risk:
1. Business RegistrationPutting together a fairly convincing website can take a few minutes altogether, so the best way to test the authenticity would be to visit the brick-and-mortar store. Most relevant permits, licenses, and ratified registration documentation of the businesses are required to be kept on display or in plain sight for customers to view.
Visiting the business may not always be practical, and many companies now do not have a physical location. In such cases, validating its credentials can be done through its online registrations.
If you’re dealing with a company in the US, check the company through its employer identification number or EIN. Virtually all businesses must have this nine-digit number that the Internal Revenue Service uses to identify the tax account of employers and some small businesses that have no employees. (Search for the company through its EIN at websites such as EIN Finder.) If the company says it does not have an EIN, ask why. Also, search companies through their tax numbers to determine if they are genuine.
The International Corporation for Assigned Names and Numbers (ICANN) provides registration authorization for many website domain names and is a great resource for determining who is the actual owner of the business website that you are researching.
2. Browse the company's website for discrepancies and indicators of professionalismThis may seem rudimentary, however, the attention to detail and professionalism of a business can reflect how trustworthy it is. If a company is dealing in millions, but its website’s homepage is ridden with spelling errors, it may warrant some digging.
In addition, you can scan the website for discrepancies in its statements, the authenticity of its phone number, postal code, and other facts that can be cross-verified. Another element to check is its website policy pages, which give a good indication of the validity of the website and its content.
3. How the company accepts paymentsIf the business in question only accepts payments made via dubious or insecure means, such as cash or paper cheques, this may be a red flag. This is because paying online businesses is frequently regarded as being the safest option when using secondary electronic payment providers such as PayPal. Look into payment options that don't need the disclosure of unnecessary personal information and allow you to get your money back if things don't work out.
4. Customer reviews and word of mouthYou may get reviews and other details about the business, including if it's a fraud, through online search engines. Try the input "[business name] fraud" to see if anything comes up on online searches. While it is possible to manage a positive internet reputation, negative feedback is more difficult to conceal.
Consumer review platforms—unlike personal blogs—reflect the views of many users and typically offer an uncensored perspective of a company's dependability. Dishonest reviews will be vigorously challenged by reliable consumer review platforms, which will refrain from editing reviews.
5. Use accredited agencies for corporate due diligenceThe above methods can go a long way, but sometimes you may require a deep dive to verify a business. Accredited agencies can carry out thorough due diligence, allowing you to access specific information that may be inaccessible to you.
Cedar Rose provides solutions to assist you in exploring worthwhile possibilities and ensure strong long-term commercial connections by fostering trust through credit assessments and compliance screening, and more.
The above steps will allow you to stay more aware of your commercial transactions and ensure a certain level of trust to help you and your firm grow. As the adage goes, ‘better safe than sorry’.
For more information, give us a call today on +357 25 346630 or email us at firstname.lastname@example.org.