Home Kim Miller Due Diligence with Websites Helps You Detect Bogus Vendors

Due Diligence with Websites Helps You Detect Bogus Vendors


By Kim Miller, Ph.D., CFE

Faculty Member, Criminal Justice, American Military University

Earlier this month, I wrote an article on vendor fraud called “Proper Vetting Is Mandatory to Avoid Vendor Fraud.” That article featured tips on how to detect a fraudulent vendor, using a fictitious startup called ABC Company as an example.

In addition to the tips mentioned in the previous article, there are other ways to determine whether or not a company is legitimate. For example, a company’s website might offer important fraud warning signs.

Fraud Warning Sign #1: The Company Website Links Don’t Work

If a company website has no working hyperlinks, there’s a good chance the company is fraudulent. For example, let’s say that ABC Company’s website states that it sells a superior-grade widget.

However, when you click on what appears to be a hyperlink, there is no link. Clicking on the contact information produces the same result: no hyperlink.

If all of ABC Company’s data is only on a homepage, that suggests the website was “thrown up” quickly onto the Internet for appearances only. This is a trademark of scammers, who can put up a fully functioning and fairly sophisticated website very quickly.

Fraud Warning Sign #2: The Company’s Domain Name Is Misspelled

Misspellings in a company’s domain name can also be an indicator of fraud. For example, the website for a legitimate ABC Company would likely be ABCCompany.com, not ABCEEcompany.com.

Fraud Warning Sign #3: The Company’s Webpages Contain Multiple Errors

Fake websites are often produced in countries where English is not the primary language. Most legitimate U.S. companies will not make spelling and grammar errors.

In addition, some languages, such as Russian, do not use articles such as “an” or “the.” English-language websites that omit these articles on their webpages would be highly suspect and could have been created by foreign scammers.

For instance, let’s say that ABC Company’s website contains numerous spelling errors. It says, “we are selling factry outlet via internet, we buy widgets from factry and this why we offer cheep prices. By soon.”

Similarly, the website footer for ABC Company states “Copyright 2016 ABC Company. Powered by abccompany.”  The proper name is not capitalized in the second reference and the “powered by” link does not have a .com extension, so there is no link back to a website.

Fraud Warning Sign #4: Other Website Information Is Suspicious

Any information regarding the company should also be thoroughly checked. It is worth your time perform due diligence to get these (and perhaps other) questions answered:

  • Is the company physically located at the address given on its website?
  • Do calls to the company’s landlord determine that the company is not a tenant?
  • Do numerous phone calls to the company go directly to voicemail? Are those phone calls ever returned?
  • Does the LinkedIn profile of the company’s principal state that he attended a specific college, but the college has no record of his attendance?
  • Do police records show that the principal has used various aliases in the past?
  • Does the principal have a criminal record?

According to one federal criminal case filing, one principal was charged with using a fake passport during the time he claimed on his LinkedIn profile that he was running his company.

Due diligence can also reveal pending lawsuits, liens, bankruptcies, evictions and foreclosures. For example, in a review of one company’s property tax records, the tax bill was not paid for the past five years. Similarly, a review of divorce cases might also reveal pending financial issues.  The next course of action would be to not conduct business with a bogus company. There are no legal ramifications to pursue. You can only reduce your own risks and use this experience going forward!

About the Author

Dr. Kim Miller is an adjunct professor of criminal justice in the School of Security and Global Studies at AMU. Her academic credentials include a B.S. in Criminal Justice and an M.S. in Criminal Justice from Kaplan University, as well as a Ph.D. in Public Safety-Criminal Justice from Capella University. She is also a Certified Fraud Examiner, a New Jersey Licensed Private Detective and an investigative analyst.