CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Are You Throwing Money Down the Drain?  Watch Out for Misleading Compliance Solicitations!

By: Jill Corbett, COGENCY GLOBAL INC. on Thu, Apr 07, 2016

Misleading Solicitations

Misleading compliance solicitations are circulating in almost every state across the country and many states have multiple scams being sent to businesses. While they may seem harmless, these misleading solicitations can cost businesses time and money (sometimes hundreds of dollars!) by fooling the recipients to think that the services being offered are required by the states where their businesses are registered.

What Do These Scams Look Like?
Usually, these misleading compliance solicitations are letters or forms being sent by private entities, with generic-sounding names such as “Corporate Compliance Center.” While the letters and forms may look official and lead the recipients to believe they need to pay a fee for some service, the entities sending these notices are NOT affiliated with state or federal government agencies.

How Can You Tell If You’re Being Scammed?
While it’s best to know what your state does and does not require of your business, a big indicator of a misleading solicitation is the fine print. Most of the misleading solicitations that we’ve come across have small and/or italicized font that says “This product has not been approved or endorsed by any government agency and this offer is not being made by an agency of the government" or “[Name of company perpetrating the scam] is not a government agency and does not have or contract with any government agency to provide this service.” Wording like this should be a red flag to businesses that receive these notices.

Another way to know if you’ve received a scam is to check the Misleading Annual Report and Compliance Solicitations website page on the COGENCY GLOBAL website, where we actively maintain a comprehensive list and samples of misleading solicitations of which we’ve been made aware. We also welcome you to send us information on any scams that are not yet on our page (send to info@cogencyglobal.com), and we will add them to our list. Please note: The misleading solicitations that COGENCY GLOBAL warns its clients about are related to business entity annual reports and compliance. We are not familiar with possible scams related to labor laws, and recommend you check with the U.S. Department of Labor’s website to confirm the validity of anything you receive regarding these.

What Can You Do to Fight Back?
In addition to forwarding any new scams to COGENCY GLOBAL, so that we may warn others, we strongly encourage you to report these scams to the Secretary of State or the attorney general of the state where your business is registered. Many of these offices have been cracking down on those sending the fraudulent mailings, enforcing heavy fines and even taking legal action against them. And, in some cases, you might be able to get your money refunded.

So don’t throw money down the drain by falling for these scams! If you receive a notice that looks questionable, look into it before sending payment.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Annual Report Compliance