We are often asked by consumers how they can check if the business or trader they are dealing with is legitimate.
Some consumers assume that all traders are legitimate because they are approved and monitored by the government, but this not true. While there are rules and regulations about setting up a business or company in Australia, authorisation to operate does not guarantee honesty. Besides, some traders may pretend to have authorisations or licenses which they do not have.
Scammers and dishonest traders have exploited our trust and you have a right to be cautious. Just because a trader can produce a business card, registration number or some other form of identification, this does not mean that you should trust them. This is particularly important if they have approached you, such as with door-to-door salespeople or tradespeople.
If you are in any doubt about the credentials of a business or trader that you are dealing with, do some research and verify any information they supply you with. If you can not satisfy yourself, it is better to deal with someone else.
Here are some tips that may help you get your research started.
1. Check if the company or business is registered
Companies, businesses and other traders must be registered before they can operate legally in Australia. While having the correct registrations will not guarantee you that the company or business is a totally genuine, it is a good start.
Companies
All Australian companies must be registered with the Australian Securities and Investments Commission (ASIC). Companies registered under the Corporations Act 2001 can conduct business throughout Australia without needing to register in individual state and territory jurisdictions.
The ASIC website has several registers that you can search for free. One you might like to try is the National Names Index, which is an index of Australian corporate and registered business names. It also includes some incorporated associations.
Businesses
If the business is not a company (such as a sole trader, a joint venture or a partnership), it will need to be registered in each state and territory where it operates. Each state and territory has its own office or agency which manages business registrations. Business registrations could be managed by your office of fair trading or consumer affairs organisation.
You can try searching the National Names Index on the ASIC website (see above), or you could try the Australian Government website, www.business.gov.au, and use the ABN Lookup function. This function is useful if you are searching for a sole trader.
Itinerant traders and door-to-door selling
Itinerant trading is loosely defined as the selling of goods or services in a public place. This includes things like mobile food vans and roadside flower stalls. It may also include door-to-door traders who approach you at home with goods to sell or offers to perform maintenance work to your property.
Some people are wary of making purchases from people who do not trade from a shop or other fixed address because they are harder to track down if you have problems later.
The states and territories have particular laws relating to door-to-door selling. If buying from somone who approaches you at your home interests you, you should find out what extra consumer protections you may be entitled to. For example, you may be entitled to a 'cooling off' period which would enable you to cancel your contract if you changed your mind.
While you should never feel pressured to buy from anyone who uses door-knocking or cold calling to seek business, if you are genuinely interested in what the person is selling or offering, it is okay to investigate further. There are plenty of honest traders who use this method of selling, and if you are careful and take reasonable steps to protect yourself, you may find it a convenient way to shop.
Always ask to see identification. If the trader claims to be representing a company, verify the details they provide.
Ask for full contact details of the trader, including phone number and address. Verify the details they provide.
Ask for all quotes to be provided in writing and take time to shop around. You may not be getting the best deal.
Stop and ask yourself if you really need the service being offered before you agree.
Check whether the person has all the necessary qualifications and registrations to perform a service.
Ask the tradesperson for written information about the cooling-off period that applies to door-to-door sales in your state or territory.
If you are in any doubt about the legitimacy of the trader, do not sign anything or make a purchase. Shop around until you find someone who you are more confident to deal with.
2. Check if the company or business has all the right permits and licenses
Many companies, businesses, tradespeople and professional service providers need some sort of additional registration or license before they can practice their business. These sort of licensing systems help industries maintain professional standards and encourage consumer confidence and trust.
Registration boards can set minimum qualifications and standards which must be achieved before granting someone a license or registration. Disciplinary action can be taken by the government or industry board if someone with registration does not maintain the standard of service required.
For example, financial advisors and investment schemes must be approved and licensed by the Australian Securities and Investment Commission (ASIC). Their details are kept on a public register that you can search through the ASIC website.
There are also special registrations and accreditation processes which apply to traders in other industries including health services, professional services, motor car dealers, builders, estate agents, funeral services and travel agents.
Check with your state or territory government, your local government or an industry or professional association whether the company, business or trader that you are dealing with should be registered or have other permits for the type of work they are doing. Verify any information the trader gives you about their licenses.
Search our Consumer & business directory for contact details of a variety of agencies and organisations that can help you. There is a link to the directory in the menu on the left.
3. Check if the company or business has any voluntary memberships
Many industries are represented by professional or trades associations. Membership of these sort of industries is generally voluntary. Ask the trader you are dealing with if they belong to an association. If they claim that they do, ask them for the membership or license number. Contact the industry association yourself and verify the information the trader gave you.
Search our Consumer & business directory for contact details of a variety of professional or trades associatiaons that can help you. There is a link to the directory in the menu on the left.
4. What other research can I do?
If you have any doubts or concerns about a business or trader, the safest thing to do is to find someone else to deal with. Ask your family, friends, or neighbours if they can recommend a person or business to you. You could also contact the relevant industry body or association and see if they have any members who service your area.
Search our Consumer & business directory for contact details of a variety of industry associatiaons that can help you. There is a link to the directory in the menu on the left.
