Consumer IQ

5 Signs a Business is Shady

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Bad businesses are out there, and they want your money.

I work with defrauded consumers every day and if there’s one thing I’m sure of, it’s this: There are unscrupulous entrepreneurs out there who believe there’s a sucker born every minute, and they’re coming for you.

Last week, I reviewed the five signs a business is legit. But there’s a darker side to corporate America — the scam artists, fraudsters and shady business owners who think you’re a sucker who can be ripped off.

Don’t be a dummy, and if you do happen to fall for one of these businesses, don’t let them get away with it. If you catch so much as a whiff of trouble, be sure to contact your local law enforcement authorities, your state attorney general and the Federal Trade Commission.

In my last post on the subject of a company’s intentions, I mentioned five specific ways a company was on the up-and-up. For example, I said if a friend who you know and trust loves the company, then that was a good sign. On the flip side, if someone goes out of your way to stop you from patronizing a business — that’s trouble.

Similarly, if your research turns up a site dedicated to running said business into bankruptcy, or the user-generated reviews are unanimously negative, or its products are terrible, don’t walk — run.

Here are five signs that a business might mistreat you or rip you off, if given the opportunity.

It doesn’t like its customers.

A company that openly ridicules its own customers, tells them to “shut up” and forces them to stand in long lines (um, I’m not thinking of any business in particular here) is unlikely to hesitate before taking your hard-earned money and offering you little or nothing in return.

Attitude is everything. A company that doesn’t even bother pretending to care doesn’t deserve your business.

It’s a monopoly or part of an oligopoly.

Not to bog you down with these business terms, but monopoly, as you probably know, means no competition. Oligopoly means very little competition. I’ve never seen a company with a monopoly — say a cable, phone or utility company — offer across-the-board exemplary customer service.

Ditto for oligopolies, more or less. What I have seen (and maybe you have, too) is that these companies overcharge us for their services while leaving us miserable. Can I hear an “amen”?

It’s on the wrong side of the law.

An investigation by your state attorney general or the FTC isn’t necessarily a sign that the business will try to scam you, but it’s a warning.

Chances are, if law enforcement is looking into the activities of a business, then there’s probably something worth looking into. You might want to look elsewhere for whatever you’re buying — just to be safe.

It just opened or it’s “going out of business.”

A business without a track record can be a sign of trouble, just like a business that is “going out of business” can sometimes be problematic. I’ve seen too many scammers, pursued by state authorities, pick up their stakes and move to a different state where they can start their nefarious enterprise again.

If you run an Internet search on a company and it turns up nothing, be wary. Also, make sure your shields are up when you deal with a company that’s on its way out. After all, there has to be a reason it couldn’t make it, right?

It runs lots of annoying ads, has gimmicky offers and is otherwise bothersome.

Legitimate businesses don’t have to blanket the airwaves with too-good-to-be-true offers. If a “24-hour” sale that features spokesmen yelling into the camera makes you feel uncomfortable, trust that instinct.

I’ve never heard from a reader who told me they really wish they’d taken the used car dealership up on that invitation to buy a “creampuff” that, for one day only, came with a flat-screen TV.

My friends, we are headed into prime scam time: The holiday shopping season. Between now and the end of December, these unscrupulous businesses will put you in their crosshairs.

But don’t worry — over the next four weeks I’ll tell you how to navigate the holiday shopping season without becoming a victim.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.