Beware of Deceptive Solicitation: Corporate Processing Service

As a business owner in 2024, it’s more important than ever to stay vigilant against deceptive practices targeting your company. One common tactic employed by companies involves sending “official-looking” notifications, urging you to pay a fee to avoid penalties. These notices often come with a sense of urgency, stating that you must pay $250, for example, to let them file your Statement of Information, warning that failure to comply could result in fines of $250 or more. 

Understanding the Tactic

These solicitations are designed to mimic official California Business forms, creating an illusion of legitimacy. The documents are crafted meticulously to appear as though they are from a government agency, complete with official-sounding language and formal formatting. This approach is intended to pressure you into making a payment without fully scrutinizing the details.

The Red Flag: Hidden Disclaimer

Upon closer inspection, you’ll often find a small, easily overlooked disclaimer hidden within the document. This disclaimer typically states something like this: “This product or service has not been approved or endorsed by any governmental agency.” This line is your primary clue that something is amiss. Despite the document’s official appearance, this statement reveals that the service is not sanctioned by any government body.

Why You Should Be Wary

  • 1. Unnecessary Payments: The fee requested by such companies is often significantly higher than the actual cost of filing a Statement of Information directly with the state. By falling for this tactic, you’re essentially paying a premium for a service that provides no added value.
  • 2. Misleading Information: The warnings of severe penalties are exaggerated to create a sense of urgency. While there may be fines for failing to file your Statement of Information on time, the penalties are typically not as dire as these solicitations suggest.
  • 3. Official Deception: The use of official-looking documents is a deceptive practice aimed at exploiting your fear of non-compliance. This tactic undermines trust in genuine governmental communications and can lead to confusion.

Protecting Your Business

To protect your business from such scams, it’s essential to be cautious and informed:

  • 1. Scrutinize All Communications: Always read the fine print on any document that demands payment or sensitive information. Look for disclaimers that indicate the service is not affiliated with any government agency.
    • 2. Verify with Authorities: If you receive a suspicious notice, contact the relevant governmental agency directly to verify its authenticity. For California businesses, you can check with the Secretary of State’s office.
    • 3. Be Informed: Educate yourself and your team about common scams and deceptive practices. Knowledge is your best defense against fraud.
    • 4. Contact Your Outside General Counsel: Our client was about to make payment on this request, until he reached out to us.  Since we are aware of this tactic, we just told him all he needed to do was file his Statement of Information for $20.00

    Conclusion

    Remember that legitimate government agencies do not endorse or authorize private companies to collect fees on their behalf. By being cautious and informed, you can protect your business from falling prey to deceptive practices.

    This blog post is written by an attorney at Cooper & Huber, LLP.  It is for general educational purposes only and is not intended as legal advice or a solicitation for services. We hope it helps you or empowers you to seek next steps in your legal matters. Cooper & Huber attorneys handle an array of personal and business law matters throughout California.  You can contact us at www.chcounsel.com or 213.423.1163.

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