Inspecting the Dots: Common Checks to Spot Fraudulent Businesses

Georges Pierre Seurat’s pointillism artwork combined small, individual dots of paint to create detailed images of his subjects. Authentic Seurat paintings have sold for millions of dollars.

Imagine that someone offered you a work of art by Seurat, but after closely inspecting its millions of dots, you found that many of them were highly irregular — some were made with colored pencil, others were hexagonal, and one even looked like a wayward splash of bolognese sauce. 

You’d have clear evidence of fraud. 

Financial institutions can perform a similar exercise to identify fraudulent businesses that were established to hide criminal activity. A company’s full profile involves many different points of external data that can be examined individually, and close inspection will reveal which businesses are authentic and which ones are fakes.

External Data	Questions to Ask
Incorporation details	Are the shareholders, directors, or beneficial owners known to be legitimate? Does the date of incorporation match the number of years it claims to have been operating? Are the registering officer and registering location known to be reputable?
Email details	Is the email address valid? Was the email address created recently, and does it match the age of the company? Is the domain registry information consistent with the company’s details?
Telephone details	Is the company phone number active? Does the owner of the number match the company’s details? Does the phone number’s location match the business address?
Location details	Is the business address valid? Are there discrepancies between the head office location and the main location of operations? Is the property listing’s history consistent with the nature of the business?
Online presence details	Has the content on the company’s website been copied from somewhere else? Do the product reviews look legitimate? Are the customer recommendations obviously incorrect?

These checks are simple, but they can take a lot of time. An investigation can require hours to collect, verify, and assess different data points that authenticate a single company. 

Brad Bardell, Director of Fraud Solutions at Demyst, explained how the effective management of external data can streamline this process. “Demyst regularly maps client attributes to more than 30 reliable external data attributes to identify abnormalities quickly,” he said. “Automating the process of locating and collecting reliable data gives our clients more time for the business decisions that add value.”

By integrating this data through a single API, organizations can spend more time on decisions that matter.