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Over the years a common theme has emerged where people feel they are scammed by a company or taken advantage of, and it appears they have not checked them out before giving up their hard earned money for services. Here is my guide on what to do to help you from becoming a victim.

Checking out a company or business before you pay them a lot of money is smart and prudent. It can help keep you from being ripped off.

The largest issue I see when people are in trouble and looking for help is they tend to run to the first company that claims they can help them, and they suspend commonsense or prudent measures and hope the company will perform the services they claim to be able to. It isn’t till later that people find out that the claims made may not have been true and then they are left in a worse spot and struggle trying to get their money back.

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How to Check Out a Company or Business

There is no one surefire way to check out a company, so feel free to make additional suggestions in the comments below. Here is what I suggest doing:

1. What is the Company Address?

Ask the company to provide the physical street address where they are located if you were to visit them. Many companies hide behind a mail drop or postal center address.While it is true that some startup companies do legitimately use these mail centers to receive mail, it is also true that many fly-by-night outfits use them as well to shield themselves. They will close the mailbox and move on to the next thing. If a company is not substantial enough or can’t provide you with a physical street address then you may want to consider if they are going to be around if a problem occurs. If they do give you a physical street address with a suite number, do a Google search for that address and suite number. Many of those turn out to be virtual office spaces. They look like legitimate addresses but a little checking will show you they are just a fancier version of the mail drop mask.You might want to suggest you are going to be in the area and you’d like to drop in unannounced at their address. If they try to talk you out of that, that might make you wonder why.You can use the street address to take a look at it from the street using Google Maps. That can be extremely enlightening.

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2. Is the Company Registered?

It’s easy to check to see if a company is licensed these days. A simple google search for ‘[state] corporation search’ will typically get you the link for the state you are searching so you can do a quick search of the the state records to see if they are registered. You will want to check the state in which they say they are located and your state. It is surprising the number of companies that are not licensed to conduct business in their own state. While a company may be operated as a sole-proprietorship and may not be a registered corporation or LLC with the state, that will at least give you a good idea how big they are, and if they claim to be a “corporation, nonprofit, or LLC” they should be registered.

3. Is the Company Licensed?

If the company is selling you some sort of financial service or debt help, the chances are that their state and your state require some sort of licensing. This is true for both for-profit and nonprofit organizations. If a company is selling you debt help or a loan, they most likely should hold a state license or be exempt from licensing. Ask them for their licensing information to be able to provide a service. If they claim they are not required to be licensed, you can use the free debt relief compliance module to check if that is true.

4. Recognize the Role of the Person You Are Talking To.

Typically the person you are talking to on the phone is either paid a commission or evaluated on one thing, making sales. The intentional or unintentional effort of a representative is to persuade you to use they services and enroll as a client with them. Don’t feel pushed. You need to understand the representative may say a lot of things that don’t wind up being supported in writing. They may engage in puffery or misrepresentation to get you to pay them money for services. If a company is attempting to sell you services and using the telephone, they must comply with the FTC Telemarketing Sales Rule.

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Ask the Company to Put Their Performance Claims in Writing (cont.) »

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