How to verify the legitimacy of a company: UK regulations and safeguarding your finances

When considering making a financial transaction with an unfamiliar company, it's essential to gather as much information about them as possible before proceeding.

In this guide, we'll provide you with the latest tips and guidance on how to determine the legitimacy of a company, ensure it complies with UK regulations, and protect your money and data.

Confirm tangible details

One of the simplest ways to identify a potentially fraudulent company is the absence of concrete evidence of its existence in the physical world. Begin by verifying if the company you're dealing with has a physical location. Locate an address on the company's website; if it's a registered office, even better. If the address isn't immediately visible, check the 'contact us' section or the terms and conditions page.

A reputable company will always provide a means of direct communication, preferably a physical address and a landline phone number, rather than just a 'contact us' form. If only a form is available, exercise caution.

To confirm the existence of the business, use Google Maps to search for the provided address. This can help verify the company's physical presence. When calling the contact phone number, prefer a landline. If an employee of the company answers the call, you may gain reassurance about the business. However, if no one answers or you're routed to an anonymous call centre, this may raise suspicions about the company's legitimacy.

In one case we’ve seen, the address of a “loans company” was in fact a barbers’ shop. When we called the barber to double check there wasn’t an office upstairs, they had no knowledge of the so-called “bank” either.

Evaluate public opinion

Utilise search engines like Google to gather information about the company, including customer feedback. Websites such as Trustpilot and Google reviews can offer valuable insights into a company's reputation before you engage with them.

If you come across negative feedback or warnings about the company from others, consider it a red flag and exercise caution. Conversely, a positive reputation indicates a higher likelihood of legitimacy. Keep in mind that forum opinions are not infallible, but they can serve as helpful indicators when assessing a company.

Negative reviews should be evaluated contextually, as some may be based on minor issues while others could reveal significant problems with customer service or product quality.

Consult the FCA register

For companies dealing with financial services, there's a straightforward way to verify their credentials – check the Financial Conduct Authority (FCA) register. This database contains information about every financial company registered and regulated by the fca. You can search for a company by entering its name and/or postcode.

If a financial services company doesn't appear on the FCA register, avoid it at all costs. Additionally, verify any registration numbers provided on the company's website, as some fraudulent companies may list bogus registration numbers.

Companies House, a government website, is another useful resource. You can search for millions of limited companies trading or once registered in the UK, all listed in Companies House.

Scrutinise the company's website

A company's website can reveal a lot about its legitimacy. Look for the following indicators:

Correct and coherent English with minimal typos and spelling mistakes.

• A physical address and a landline number.

• A privacy policy and company history, which can provide insights into the company's longevity, ethical stance, and mission.

• A Company Registration Number (CRN) confirming registration with companies house; this should be prominently displayed on the website, often found in the privacy policy or terms and conditions.

• When making online purchases, review the company's refund and exchange policy thoroughly.

• Ensure the website url begins with "https://" and look for a padlock or key symbol in your browser to confirm a secure connection.

• Investigate social media presence

• Checking the company's presence on social media platforms can offer additional insights. Most reputable companies, especially those selling to the public, maintain active profiles on platforms like facebook, instagram, or twitter. Examine how they engage with customers and what customers are saying about them.

Scrutinise the domain name

Be cautious if a website's domain name references a well-known brand but doesn't match the official brand's website. Scammers often use this tactic.

For instance, a website like www.cheapipads.net may reference iPads but is not affiliated with apple. Similarly, www.discountgucci.org may mention Gucci but is not the official Gucci website.

Suspicion should arise in such cases. Be especially alert to web domains ending in '.net' and '.org,' as they are not typically used by genuine retailers.

Payment methods

Fraudulent companies often request payment through bank transfers or cryptocurrencies. Paying by bank transfer can make it challenging to recover funds if the transaction turns out to be fraudulent.

For added consumer protection, it's advisable to use a credit card when making payments. This way, your bank account remains secure, and you have recourse for refunds.

Here’s how Section 75 protects your credit card purchases.

Verify the presence of a padlock

Check for a padlock symbol in the URL bar. This indicates that the website is encrypted, safeguarding your data during browsing and transactions. However, some scammers can forge the padlock, so use this indicator in conjunction with other due diligence checks.

Be cautious with trust marks

Trust marks can be misleading. Various versions of trust-mark logos exist, and not all countries participate in trust-mark schemes. To ensure the trust mark is genuine, contact the trust-mark company directly and verify its authenticity.

Trust your instincts

If you're already questioning a company's legitimacy to the point of seeking guidance, trust your instincts. If you feel uncomfortable dealing with the company, it's best to err on the side of caution and refrain from proceeding. Remember the adage: "if it looks too good to be true, it probably is."

What to do if you get scammed

If you suspect you've fallen victim to a scam, promptly inform your bank. They can enhance security on your current account to prevent further unauthorised withdrawals.

Additionally, report the incident to Action Fraud, either through their website or by calling 0300 123 2040.

Always prioritise your financial and data security when dealing with unfamiliar companies. Vigilance and thorough research are your best defences against fraudulent activities.

Here’s what to do if you think you’ve been scammed

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