How to Spot a Fraudulent Business Vendor

Starting a business is a dream for many people but it comes with many challenges that they have to overcome. For an entrepreneur to build their startup, they have to develop a business plan, secure funding from angel investors, hire staff, partner with other companies, and find vendors to supply materials needed for their operations.

For companies to run smoothly, the vendors must be reliable and have the means to fulfill their contractual obligations. However, some vendors have a history of defrauding clients and not complying with the regulations that guide their industry. You should avoid such vendors, and here are some ways to spot them:

Verify their authenticity

Before entering into a contract with a potential vendor, you should verify their authenticity. Companies that serve as vendors are business entities that must be registered with the state in which they operate. Their details should be available online. Software developers have created Secretary of State API that companies can use to seamlessly verify the details of a vendor they want to do business with.

Read online reviews

The internet is awash with information about many kinds of businesses, ranging from product delivery companies to senior care homes. Part of that information is online reviews about vendors. You should read those reviews to know what past clients think about any vendor you are considering working with. If they are fraudulent or have a history of lousy service, the reviews will mention that. If there are little or no reviews, or all reviews seem overly positive, the vendor is likely fraudulent.

Observe their online activity 

Internet usage is high and businesses use it to increase brand awareness and inform consumers about their products and services. Business vendors also partake in this trend, so you should observe the social media accounts and websites of the vendors you are considering working with to be sure they are active as well. The more active a business vendor is online, the less likely they are to be fraudulent. However, if its website is unsecured and has no (verifiable) physical address listed, it is likely fraudulent.

Note their communication pattern 

Fraudulent business vendors are usually reluctant to share specific details about any information you ask of them. They are typically vague and may sometimes respond unprofessionally. Also, they use pressure tactics to knock entrepreneurs off balance and push them to make payments before they realize they are being scammed. Note the communication pattern of any vendor you are negotiating with and be extra cautious if they are behaving in the manner described above.

Consider their preferred payment methods

Businesses that operate legitimately request payments via checks, credit cards, and other conventional methods. Fraudulent business vendors may request payments through wire transfers, cryptocurrency, cash, and other payment methods that cannot be easily traced.

Endnote

Growing a startup is tough and it will be even tougher if you fall for the scams that fraudulent business vendors perpetuate. That is why you should use the steps mentioned above to observe fraudulent vendors and protect your business. Ensure you use the secretary of state API to verify that any company you want to interact with is real and properly registered with the government.