How to Detect Fake Businesses Online

The internet has revolutionized how businesses across sectors connect with customers and business partners, but it’s also become a breeding ground for fake businesses. At first glance, these fraudulent entities appear like legitimate companies while laundering money or targeting consumers and financial institutions with increasingly sophisticated online scams.

The rise of fake businesses online

In recent years, major tech and financial organizations have sounded the alarm on the rapid growth of fake businesses, hence casting a spotlight on just how serious and widespread the problem has become.
For example, Google has removed over 10,000 fake business listings from Google Maps and is now suing a network of scammers behind them (Source: CBS News).

Visa, in a major anti-fraud effort in 2024, dismantled 12,000 fraudulent merchant websites linked to background-check scams on dating apps. That same year, Visa blocked over $350 million in attempted fraud (Source: Axios).

Although in different ways, fake businesses affect both consumers and legitimate businesses. For consumers, these fraudulent operations often lead to financial loss, identity theft, and a lack of recourse in cases of fraud. For businesses and FIs, the main risks include financial losses as well as reputational damage and regulatory fines.

Why fake businesses are harder to spot than ever

Why are fake businesses becoming so prevalent? The reality is that tools that help real businesses operate more efficiently are the ones also enabling fraudsters to scale their operations.

For example, modern website builders make it effortless to launch polished websites in hours. And with the rise of generative AI tools and AI agents, scammers can create convincing product photos, fake customer reviews, and detailed brand stories from scratch, all with just a few clicks.

While many fake businesses are created simply to scam consumers out of their money, others act as fronts for more serious criminal activity, most notably money laundering. Fraudsters often set up fake laundromats, cafés, or small restaurants to acquire legitimate point-of-sale (POS) systems. Once up and running, these entities are used to funnel illicit funds through seemingly legitimate transactions, often involving low-cost or intangible goods that require minimal overhead or supply chains. In other cases, fake businesses are set up as online stores, only to disguise the true nature of the transactions, such as those linked to adult content, illegal gambling, or other forms of money laundering. For financial institutions, detecting these fake operations early in the onboarding and KYB process is crucial, as they pose a significant risk to both financial integrity and regulatory compliance.

The role of deep online due diligence in spotting fake businesses

Deep online due diligence is a key strategy for identifying fake businesses before it’s too late, reducing the risk of fraud for consumers, businesses, and financial institutions. It involves going beyond surface-level checks to thoroughly analyze the digital presence and history of a business.

Official registration alone does not guarantee the legitimacy of a business, especially in jurisdictions where setting up a company is quick and requires minimal verification. As a result, finding a business listed in an official company registry is not always enough to confirm it is genuine. A more comprehensive approach is necessary, one that digs into the company’s online footprint, including its website, social media presence, domain information, and customer reviews. This deeper examination helps uncover inconsistencies or fraudulent activity that may not be immediately evident from official records alone.

For a deeper look into why registry data fails to provide comprehensive business verification, check out Why Registry Data Alone Fails at Business Verification.

Most common use cases of deep online due diligence on businesses

Deep online due diligence can play a crucial role in various industries and sectors, helping businesses, financial institutions (FIs), and consumers protect themselves from the risks posed by fake businesses. Here’s a look at some of the key areas where these checks prove particularly useful:

Consumer checks on e-commerce websites before completing a purchase
Many consumers are already doing a quick scan of the vendor websites and online reviews before buying from an unknown business on the internet. However, fraudsters often create seemingly credible online presences for their businesses, tricking buyers who perform only surface-level checks. Through deep online due diligence, on the other hand, consumers can identify more sophisticated red flags, such as inconsistencies in domain registration data, questionable customer feedback, and suspicious social media activity. These checks can help consumers avoid falling victim to scams and ensure that their purchases are safe.

Enhanced KYB verification by FIs and Fintechs during business onboarding
For financial institutions and fintechs, verifying the legitimacy of businesses during the onboarding process is a crucial regulatory requirement. At the same time, driven by the rise of challenger banks, most financial institutions now allow businesses to open accounts or apply for loans online, making it essential to perform the required Know Your Business (KYB) checks in a way that is both efficient, fully digital and secure. While regulated FIs must review official documentation and map out ultimate beneficial owners (UBOs) as part of standard KYB procedures, adding deep online due diligence as a pre-KYB step helps them enhance both compliance and accuracy in a fully silent way. By examining a business’s digital presence, domain reputation, and online history, FIs can identify high-risk clients more precisely without delaying legitimate business applications. This method strengthens anti-money laundering (AML) compliance and ensures that only authentic businesses are onboarded swiftly and securely.

Business checks on suppliers or subcontractors to manage risk
For companies that depend on international suppliers or subcontractors, verifying the legitimacy of these partners is a vital part of risk management. Without proper checks, fake businesses can infiltrate the supply chain, leading to financial loss, reputational damage, and regulatory exposure. Increasingly, deep online due diligence is also being used to assess environmental, social, and governance (ESG) risks, supporting compliance with emerging regulations. By conducting thorough risk assessments using information from both the surface and dark web, businesses can gain stronger assurance that their suppliers and subcontractors are legitimate, transparent, and aligned with ethical and operational standards.

What are the methods to detect a fake business online?

If you need to verify a business only sporadically, for example before buying from a new website, you can perform deep online due diligence manually in a few easy steps. However, for businesses or financial institutions that need to assess customers or suppliers at scale, relying on manual checks is not a viable option due to time and resource constraints. In these cases, automated solutions, powered by AI and advanced data analytics, are essential for handling large volumes of verification efficiently.

Manual approach: performing due diligence on a business

If you're conducting a one-off check on a business, whether a supplier, partner, or even a store you're buying from, you can follow these steps to assess its legitimacy.

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All of these checks are part of a manual due diligence process that can help uncover red flags and validate whether a business is genuine or potentially a scam.

Automated solutions

Given the growing need for speed and efficiency, automated solutions have become indispensable for financial institutions, payment providers, and digital platforms looking to detect fake businesses at scale. These solutions use sophisticated algorithms and, increasingly, suites of AI agents to streamline the due diligence process.

Automated systems powered by AI agents can perform several key tasks, including:

• Domain analysis
  An automated solution can analyze the reputation of a business’s domain in real-time, checking for historical registration patterns, Whois information, and identifying if the domain has been involved in past fraudulent activities or linked to suspicious IP addresses. It can also assess whether the domain has been frequently changed or registered for a short period, which are common red flags for fake businesses. This method is much faster than manually checking each domain individually and helps ensure a more thorough and efficient verification process.
• Social media and online reputation checks
  Automated tools can quickly scan social media platforms, review websites, and other digital channels to verify a business's online presence. For example, a legitimate retailer is likely to have a presence on platforms like Etsy or Amazon for selling products, while a software company would likely be active on LinkedIn or Glassdoor. If a business is not present on the expected platforms or lacks engagement in these channels, it may raise a red flag.
• Website screening of privacy policy and T&Cs
  Digging into a business’s Privacy Policy and Terms & Conditions is an effective way to spot potential red flags. Legitimate companies will have clear, detailed policies that explain how they handle customer data and operate legally. Automated tools can verify if the company’s registered name appears correctly on these pages or if they contain placeholder text or generic content copied from other websites. Missing or poorly written policies could indicate that the business is fake or has been hastily set up.
• Presence of digital ads across platforms
  Another indicator of a business’s legitimacy might be the consistency and history of its online advertisements. Depending on the sector, an established business usually has a track record of ads across different platforms such as Google, Meta, or LinkedIn. Automated systems can track these ads and assess whether the same business has been consistently advertising over time. For example, a business selling fake designer bags today but advertising completely different products six months ago might be flagged for suspicious behavior. Tools like Google’s Ads Transparency Center allow for easy tracking of all past and current ads from any advertiser, providing further verification of the business’s online consistency.
• Automated due diligence tools offer the advantage of scalability and speed, making them ideal for financial institutions and businesses in need of verifying large volumes of business customers or merchants.

How Trustfull Domain helps detect fake businesses

Trustfull Domain is an advanced suite of AI agents designed to perform deep online due diligence on businesses at scale. By leveraging hundreds of digital signals in real time, Trustfull Domain detects red flags that may otherwise go unnoticed, ensuring a more thorough and efficient business verification process and strengthening KYB and AML checks.

Here’s how Trustfull Domain can help businesses with fake business detection:

Real-time domain reputation analysis
Trustfull Domain automatically analyzes various factors such as domain registration history, ownership details, presence of placeholder or parked domains, and type and number of linked email addresses to instantly identify flagrant red flags in a business online application. ‍

Online presence across social media, digital platforms and marketplaces
Depending on their industry, businesses are often expected to have some presence on platforms such as Amazon, Etsy, Instagram, LinkedIn, WhatsApp Business, Facebook, or Glassdoor. A complete absence, or a presence that lacks meaningful engagement, can be a red flag. Likewise, newly created social media accounts with minimal activity may point to a fabricated or hastily assembled digital footprint. Trustfull Domain analyzes the profiles linked to any domain on various social media, e-commerce and business platforms to detect any inconsistencies or signs of manipulation.

Tracking digital ads for transparency
Another effective way to verify a business’s legitimacy is by analyzing the ads it runs across major platforms like Google, Meta, and LinkedIn. Automated tools can gather all ads from a business in one place, helping to spot irregularities such as rapid shifts in advertised products or inconsistent branding. This level of transparency can help identify businesses that may be hiding their true operations or engaging in fraudulent activities.

Integrated API checks for fast and scalable verification
For businesses handling a high volume of potential customers, automated solutions are key for efficient verification. An API integration can silently screen businesses and merchants during onboarding, assigning a risk score in real time. This ensures a smooth experience for legitimate businesses while quickly identifying high-risk entities. This is particularly valuable for financial institutions and fintechs that need to onboard and validate large numbers of entities or merchants swiftly without compromising accuracy or customer experience.

Transparent risk scores and customizable risk rules
All assigned risk scores in Trustfull Domain are fully transparent and auditable, providing clear explanations of what factors contributed to a high or low score. The platform’s risk engine and rules are adaptable to meet each client’s specific needs, risk appetite, and requirements, ensuring a tailored approach to fraud detection. Whether adjusting thresholds or fine-tuning criteria, businesses can align the system with their unique risk profile for more accurate, personalized business assessments.

Detect fake businesses with Trustfull

If you’re ready to strengthen your fraud detection and KYB processes, now is the time to act. Explore how Trustfull Domain can help streamline your due diligence process, scale your fraud prevention and business verification efforts, and minimize the risks posed by fake businesses.

Talk to our experts and don’t allow fake businesses to slip through the cracks.

[Learn more about Trustfull Domain here.]

FAQs

What is a fake business?
A fake business is an entity that pretends to be legitimate, often using fraudulent methods like fake registration details, placeholder websites, or manipulated online profiles. These businesses are created to deceive consumers, financial institutions, and other companies for financial gain.

How can I tell if a business is fake online?
Key signs of a fake business include suspicious domain registration details, hidden or fake physical address, poor-quality websites, inconsistent social media activity, and a lack of transparency in contact information. Verifying the business's digital footprint and performing deep due diligence can help reveal potential fraud.

Why is deep online due diligence important for detecting fake businesses?
Deep online due diligence goes beyond basic checks, allowing businesses and consumers to investigate a company's digital presence, uncovering red flags that are not visible through standard verification methods. This deeper level of scrutiny is essential for identifying fraud early.

How can consumers protect themselves from fake online businesses?
Consumers can perform their own checks by reviewing a business’s website, social media presence, and online reviews before making a purchase. Tools like domain analysis and reputation checks can help confirm a business's legitimacy.