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Whether you’ve already formed your corporation or LLC or are just about to, there’s something we should talk about, and that’s the dreaded world of corporate compliance scams. You see, once your company is filed with the state, the information on your filing becomes public record and can be obtained through public databases. You know who loves those databases? Scammers.
Corporate compliance scams abound in almost every state, so don’t be surprised if one finds its way to your mailbox. They most often come as official-looking notices stating that your business must pay a fee to comply with varying “requirements” that aren’t actually needed.
These misleading solicitations usually come from companies with vague, official-sounding names such as “Business Filings Division” and “Corporate Compliance Services,” and they often include a false department seal to make you think they’re the real deal. Some go so far as to include your company’s official state ID number or other public company details, with a false deadline and warnings about penalties and fines—anything that might intimidate you into paying.
Tricky, we know, but fear not. Here are a few fool-proof tips to help you separate the official notices from the fake:
- Look for misspelled words, poor grammar, odd capitalization, and vague references to an "annual fee" or "annual payment” instead of a filing fee. If it looks fishy, it probably is.
- Search online for the exact name of the entity that sent you the notice. Is that name affiliated with a legitimate state or federal government agency?
- If the name does match a legitimate agency or department, does their website confirm the fees and requirements as listed on the notice?
- Read the fine print. Some solicitations will openly tell you that they aren’t affiliated with a government agency, and/or that by signing their form, you’re entering into a contract with them for ongoing services. This is a sure sign that the notice isn’t legitimate, so be sure to read the fine print carefully.
- When in doubt, contact your Secretary of State’s office and ask them to confirm if the notice is legit or not.
If the notice you received doesn’t hold up to scrutiny, report the misleading solicitation to your state Attorney General’s office and the FTC, and then pat yourself on the back for not being among the many business owners taken in by these scam artists.