We have seen several scams like this over the years and they always result in at least one or two panicked/angry calls from some clients. It seems that there will always be an unethical actor willing to utilize fear tactics or capitalize on the frenzied time constraints of the small business owner to make a buck. Accordingly, the firm has decided to proactively warn our clients about the not-quite-but-almost-fraudulent-flyers advertising business renewals with Colorado Secretary of State that have been circulating recently. The Colorado Secretary of State’s Office issued a warning to small-business owners on Monday to ignore these official looking and totally misleading flyers that many businesses have been receiving.
That’s the key here: these flyers are intentionally created to appear as though they are official while being nothing but a value suck. The flyers contain the name of the business, its state-issued ID number and its formation date (all of which are part of the public record and easily accessible from the Secretary of State’s Office’s webpage). They also contain an ominous warning about filing a periodic report in a timely fashion in attempt to scare busy small business owners into paying for the “service.” While the flyer does contain language stating that it didn’t originate from a governmental agency (and thereby narrowly avoiding being classified as blatantly fraudulent) the fraudulent intention is clear. Looking at the facts the notice offers to make a required annual periodic filing on behalf of a business to the state for the usual cost of $10, plus a $75 “processing fee.” Which, in case you are wondering, is $75 dollars more than the filing of a notice actually costs.
In a recent press release addressing the scam, Secretary of State Jena Griswold stated, “We want to make sure Coloradans have the tools they need for their businesses to succeed. We have an easy-to-use and affordable business filing system. Business owners should be wary of third-party solicitations related to filing requirements.”
Secretary Griswold is right, Colorado has a wonderfully straightforward registration system and the fees involved are low compared to those charged in many other states. Also most filings are instantaneous, which is a major positive (compare that to Delaware, the most popular state for business incorporation in the US, where an “expedited” application costs $1000.00 and secures an application within twenty-four hours… a blistering pace in the internet age).
Unfortunately we have seen many similar scams over the years. One seemingly popular version of this stems from recently filed Federal Trademark applications. The Firm has fielded numerous calls from clients about emails and letters they have received detailing “mandatory” clearance checks that hint at the likely failure of a recently submitted application unless the services described in the notice are purchased. Just as alarming are the notices of unpaid bills for services that sound legitimate but are unnecessary and have not been requested or performed. All of these notifications look as though they are issued a governmental agency or a real service provider if they are not reviewed closely.
If you are ever worried about the the legitimacy of a notice that looks like it might be from a government agency or SRO give us a call, we can help!