How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off

Here’s a hard truth: scammers are getting smarter, but that doesn’t mean you have to be their next victim. Whether you’re hiring a company for debt relief, home repairs, or any service that requires handing over your hard-earned cash, doing your homework first can save you from financial heartache.

As a consumer debt expert, I’ve seen too many people jump into agreements with businesses that promise the world but deliver little (or worse, nothing). The problem? They often didn’t check the company out before signing up.

This guide will walk you through exactly how to vet a business before you pay them a dime—because once the money’s gone, getting it back can be a nightmare.

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Why Checking a Company Matters (A Cautionary Tale)

In my experience helping people since 1994, I can tell you that it’s far easier to do your homework upfront than to try and recover money after you’ve been scammed. Once the money is gone, getting it back can be a long, stressful, and often impossible process. I’ve seen too many people chase refunds for months, only to hit dead ends. That’s why taking a few extra steps to verify a company before you sign anything can save you from a world of financial and emotional pain.

A few years ago, I got an email from a woman named Lisa who had fallen into a debt relief scam. She was struggling with $25,000 in credit card debt when she saw an ad for a company that promised to settle her debts for a fraction of what she owed. Desperate for a solution, she signed up, paid them $3,000 in fees, and waited for results.

Months went by. Her creditors kept calling. The company kept assuring her things were “in process.” Then, one day, they stopped answering her calls. The website disappeared. Lisa was left with more debt, no resolution, and a $3,000 hole in her bank account.

Sound familiar? I hear stories like this all the time.

The good news? You can avoid this mess by following these steps before you commit to any company.

How to Check Out a Company or Business

Step 1: Verify Their Address (Because PO Boxes Are Shady)

• Ask for a physical address. If they dodge the question or give you a maildrop location, be suspicious.
• Google the address. Does it belong to a real office or is it a virtual office space?
• Offer to visit. If they push back with excuses, that’s a red flag.
• Use Google Street View. If the “office” looks like an abandoned warehouse, run.

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Step 2: Check If They’re a Legally Registered Business

• Search the Secretary of State website for their business registration. Every state maintains a database where you can verify if a company is registered and in good standing. Simply search ‘[Your State] business entity search’ to find the correct website.
• Look for inconsistencies. Are they registered in a different state than they claim?
• Check their EIN. Legit businesses have an Employer Identification Number (EIN). If they hesitate to share it, that’s a concern.
• See if they have an active business license (especially if they provide financial services).
• Verify they are licensed to operate in your state. Some businesses may be legally registered but not licensed to provide services in your state.

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Step 3: Look Up Their Industry-Specific Licenses

• Debt relief, mortgage modifications, financial services? Check with your state’s financial regulatory agency or the National Multistate Licensing System (NMLS) Consumer Access (nmlsconsumeraccess.org).
• Contractors? Check state and local licensing boards via your state’s Department of Consumer Affairs.
• Health services? Verify with the Federation of State Medical Boards (FSMB) (fsmb.org).
• Legal professionals? Check with your state’s Bar Association (ncbex.org).
• No license when one is required? Walk away.

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Step 4: Pay Attention to Sales Tactics

• Are they pressuring you? High-pressure sales are a major red flag.
• Are they making wild promises? No company can guarantee debt relief, a loan approval, or immediate financial success.
• Ask for proof. If they claim high success rates, ask for documented evidence. If they dodge the question, it’s probably a lie.
• Don’t forget that if a debt help company reached out to you, they are trying to sell you something in their best interest, not necessarily yours. The person you will probably talk to is a commissioned salesperson and not a true financial advisor. Buyer beware.

• If a company is attempting to sell you services and using the telephone, they must comply with the FTC Telemarketing Sales Rule.

Step 5: Ask the Company to Put Their Performance Claims in Writing.

If a representative is willing to tell you they have a great success rate for the services they sell, they should not hesitate to share that data with you. The Federal Trade Commission has specific guidance about how a company should do that.

Here is what the FTC says

“May I base my advertising claims on the experiences of some previous customers?

Yes, but your sample must represent the entire relevant population of your past customers. To accomplish this, you must, among other things, use appropriate sampling techniques, proper statistical analysis, and safeguards for reducing bias and random error. For example, you can’t cherry-pick the most successful examples to inflate your results.

If you advertise or represent that your customers will save a certain amount of money or reduce their debt by a certain percentage – for example, “We can settle your debts for 40% to 60%” – your statements must be truthful. You must have objective proof to back them up. Your claims must accurately reflect the results you’ve achieved for previous customers. It’s essential to consider the message your claims convey. Under the law, the FTC looks at claims from the point of view of reasonable consumers. Therefore, what matters isn’t the literal accuracy of the words you use but rather your proof to support the “net impression” your message conveys. For example, claiming that your past customers have achieved “up to 60% savings” is likely to convey to new customers that they, too, will get savings of around 60%. The claim is deceptive if you don’t have solid proof to back that up.

Here are several important requirements for making sure your savings claims are truthful and not deceptive:

State the savings based on the customer’s debt when they sign up for the program. You may not inflate savings figures or percentages by including interest and fees the credit card company adds after a customer signs up for your program.

Example 8: Andy signs up with a debt relief service offered by Company H, owing $10,000 on his credit card. One year later, following negotiations with the credit card company, Company H negotiates a settlement allowing Andy to pay $6,000 to resolve the debt. However, since Andy enrolled, the credit card company has charged him interest and late fees totaling $2,000, so Andy now owes $12,000. By getting a settlement for $6,000, Company H has saved Andy $4,000 ($10,000 minus $6,000) or 40% of the debt at the time of enrollment. It would be deceptive for Company H to claim to have saved Andy $6,000 ($12,000 minus $6,000) or 50% of his debt.

Include the impact of your fees on the claimed savings. You may not inflate your savings claims by excluding the fees your customers paid you.

Example 9: Betty owes $10,000 on her credit card and signs up with Company J’s debt relief service. Company J gets a settlement allowing Betty to pay $5,000 to resolve the debt. However, at the time of settlement, Company J charges Betty a $1,000 fee for its work. It would be deceptive for Company J to claim to have saved Betty $5,000 – or 50% of her debt – because Betty also had to pay $1,000 in fees. Instead, Company J may truthfully state Betty’s savings as $4,000 ($5,000 minus $1,000) or 40% of Betty’s debt.

In calculating the results you’ve achieved over time, you must include customers who dropped out or otherwise failed to complete the program. Don’t base your savings claims only on customers who successfully completed your program.

Example 10: Company K had ten customers signed up for its service. Each one had $10,000 in unpaid credit card debt for a total of $100,000. Five of the customers completed the program, and each saved $5,000 – for a total savings of $25,000. The remaining five customers dropped out of the program, each one still owing the $10,000 they owed when they signed up with the program. Taken together, Company K had saved its customers $25,000 – or 25% – of the total $100,000 debt they had when they signed up with the program. It would be deceptive for Company K to exclude the drop-outs and claim that it saved its customers 50% of their debt.

Include all debts enrolled by your customers, not only those that have been settled successfully. In calculating your savings claim, you may not exclude accounts you failed to settle, even if the failure was due to customers dropping out of your service.

Example 11: Company L has ten customers, and each of them enrolls two $1,000 debts in the program – totaling 20 debts or $20,000. Company L is able to settle 10 of the 20 debts, each for $500. However, it was unable to settle the remaining 10 debts before those customers either completed or dropped out of the program. Thus, Company L has saved its 10 customers $5,000 or 25% of their debts in the program. It would be deceptive for Company L to exclude the 10 accounts that weren’t settled and claim a savings rate of 50%.

While the FTC examples apply specifically to debt settlement companies, the examples can also be used as guidance for other debt help. For example, the success rate of a mortgage modification or credit counseling program.Nearly all credit counseling programs will not put their performance numbers or success rates in writing. That should certainly make you wonder why.

For example, suppose a company is trying to sell you mortgage modification help for thousands of dollars. In that case, they should be willing to provide you with documentation to show how successful they have been. And even supply performance data with your specific large lender should be on file. If they are unwilling or unable to provide you with such data, that should make you hesitant.

Remember, their data must show the performance of all clients enrolled, not just successful clients.”

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Step 6: Review Complaints and Lawsuits

• Check with the Better Business Bureau (BBB). Don’t just look at ratings—read complaints.
• Look up the company name + ‘lawsuit’ or ‘scam’ on Google.
• Search the Consumer Financial Protection Bureau (CFPB) complaint database.
• Check with the Attorney General’s office in your state and theirs.
• Browse consumer advocacy sites like Trustpilot and Ripoff Report.
• Search GetOutOfDebt.org. If the company sells debt relief, see if complaints exist.

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Step 7: Read the Fine Print (No, Seriously, Read It)

• Don’t assume verbal promises mean anything.
• Look for ‘No Refund’ policies.
• Watch out for arbitration clauses.
• Check for hidden fees.

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Step 8: Save Everything

• Print out the company’s website.
• Save emails and written communication.
• Document everything.

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Step 9: Be Wary of Payment Methods

• Avoid paying by wire transfer, gift cards, or cryptocurrency.
• Use a credit card.
• Never pay upfront for vague promises.

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How to Get Your Money Back if You’ve Been Scammed

If you realize too late that you’ve been scammed, don’t panic—take action immediately:

1. Dispute the charge. File a chargeback with your bank or credit card provider.
2. File complaints with regulators. Report to the CFPB, FTC, or your state Attorney General.
3. Leave public reviews to warn others. Post on BBB, Trustpilot, and GetOutOfDebt.org.
4. Consult an attorney if necessary. A legal demand letter can sometimes force a refund.
5. Read my guide, How to Get Your Money Back From a Debt Relief Company if You Feel Like You’ve Been Scammed.

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Final Thought: The Best Scam Protection Is Patience

Scammers rely on urgency. They want you to feel like you must act now before you have time to think. Don’t fall for it.

Take a breath. Do your research. If a company is legit, they won’t mind you checking them out.

Follow these steps, and you’ll be ahead of 99% of people when it comes to avoiding scams. Knowledge is power—use it to protect yourself.

Bookmark this guide and share it with friends and family. The more people know how to spot scams, the harder it is for fraudsters to succeed. Stay informed, stay skeptical, and stay safe!