By Dean Kaplan, CEO, and President, The Kaplan Group
Data centers are judged by their ability to keep clients’ information and systems safe and secure. Almost anyone who works within a data center has to be familiar with security protocols. So, it may surprise you that just like any business, a data center can fall victim to fraud, accepting a fraudulent business as a client. As a collection agent, it’s part of my role to help clients avoid fraud because it is nearly impossible for even an experienced collection agency to collect from a nonexistent business.
People who commit business fraud are very talented at using emotions to prevent otherwise sensible business people from doing due diligence. I regularly get claims where basic research has not been done. When I do the research that should have been done before, I often discover that the information provided was either misleading or false. In either case, it is no surprise that the client could not collect on the invoices. Fortunately, most of this type of business fraud can be prevented with common sense, caution, and some simple research.
Look for Professionalism
If a legitimate company needs the services of a data center, they should have a professional-looking website. If the website is still under construction, you should take that as a warning sign. Another warning sign would be if the company’s email address is a free service such as Gmail or Hotmail.
It’s important to verify that the contact information on the website is the same as the information provided on the credit application, purchase order, stationery, business card, or other materials you have from the company. This helps to ensure that you have found the correct website as well as confirming that the potential client is providing consistent contact information.
Use the Phone
A company that does not publish a phone number doesn’t want its customers calling. The lack of a phone number on a website is a common factor in the fraudulent cases I see.
Do a Google search on the company to see what phone numbers come up. Cross-reference this data with the information on any paperwork submitted by the would-be client. If your search doesn’t show that the number is directly tied to the business, then you need to learn more about that business before accepting them as a client.
It is very important to call phone numbers. Be careful if the phone is not answered in a professional manner or the voice mail system does not identify the company or provide a way for you to talk to a person. Businesses who make it hard to talk to a person generally do so for a reason.
Check Corporation Status
If the company indicates they are a corporation, LLC (limited liability company), or partnership, confirm this with the appropriate Secretary of State. Forty-seven of the 50 states have free websites where you can get this information with a simple search. A complete list of these sites, with links directly to the search pages, is provided on our website.
Confirm that the name and address registered with the state are consistent with the information you have and make sure to investigate any discrepancies. If the business is required to have a professional license, such as a contractor, real estate broker, or medical professional, use a similar process with the appropriate licensing authority’s online website.
In addition to confirming that the information you’ve been provided is correct, you should also dig a little into a company’s reputation. Many non-fraudulent businesses are still horrible credit risks. Do a general Google search for their name, and pay attention to reviews on sites like Yelp, Google, the Better Business Bureau, and Ripoff Report. You might also want to consider researching the owner’s personal reputation. If you find that the company has a bad reputation, you may want to reconsider doing business with them.
Pay Attention to What They Ask
A legitimate company should ask a lot of questions about any data center they are considering. If a potential client is not asking you enough questions, or the right questions, find out why.
As a data center, it’s especially important that you take the appropriate steps to make sure your clients aren’t engaged in any fraudulent or illegal activity. If your client is conducting illegal activities, it could put your data center and the data of your other clients at risk. Taking these simple steps to research potential clients can help you keep your business safe and profitable.
About the Author:
Dean Kaplan is president of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He is an expert in the technology industry and has 35 years of manufacturing, international business leadership, and customer service experience. Today, he provides business planning, training, and consultation to a variety of global companies.