Business Scam Makes Companies Default on Their Obligations to The State


There is a scam going on in California, targeting businesses. One business doing this has an address at 980 Ninth Street, 16th floor, Sacramento, CA 95814.

scam – deprive of by deceit;

“He swindled me out of my inheritance”; “She defrauded the customers who trusted her”; “the cashier gypped me when he gave me too little change”

Business Filings Division and other businesses are engaging in deceptive practices, sending out business forms that look a lot like official California State Government documents. They take money away from small businesses and cause companies to default on their obligations to the State.

It is a clever scheme and it almost tricked me. We received their letter, addressed to our official company address and it quoted our anniversary date for lodging the Statement of Information.

As time was running out, we prepared to fill in the form, but two things stood out. First, the form didn’t contain some of the fields I was expecting, so I thought it may have been redesigned. Second, the cost had taken a huge hike, from $20 to $239. There were other clues in the document, but those two were enough to make me take action.

I knew the state wanted to plug it’s massive deficit, but I didn’t think it would do that by destroying thousands of small businesses by skyrocketing the fees, so I went to the Secretary of State website. I found the official form and it looked exactly the way I expected it to.

A call to the Secretary of State’s office led to the confirmation that the fee was still $20 and the form in my hand was from a private company. The state knows about their activities, but perhaps there is not much they can do about it. Apparently it is legal to fool business owners into paying $239, using a deceptively designed form. They use the information supplied on the form by the duped business owner, to fill in the official state form, and lodge the form, with a payment of $20.

Now that is a well-thought out scam. One major problem is that a duped company using this service does not fulfill its obligation to the state by using the third party.

The Better Business Bureau rates “Business Filings Division” an “F” because they engage in deceptive business practices and do not respond to information requests.

Better Business Bureau Report

The Secretary of State website now has an Alert posted on the front page.

Misleading Business Solicitations: Certain private companies have been soliciting business through mass mailings to corporations and limited liability companies with a solicitation similar to a Statement of Information that is required to be filed with the Secretary of State.”

Submitting the fees and filings required by the Corporations Code to a third party for filing with the Secretary of State, does not meet the business entity’s statutory obligation to file a Statement of Information with the Secretary of State.

The moral of this story is to keep good records, understand all of your obligations, keep copies of all forms and document everything meticulously, especially anniversary dates. In addition, always check the Secretary of State website for the latest information, forms and fees.

Business is hard enough as it is. We don’t need scammers using deceptive practices to make it harder for us. Businesses need to help each other.

Please let us know if you received mail from Business Filings Division. Did they trick you? Have you called the Secretary of State’s office to check what you should do next?

The Tax Loopholes blog has a discussion going on about this too, showing that several people were fooled into paying the $239 fee. A good question now is, do they need to refile and pay the $20 fee?

Alan Gray is the Publisher and Editor-in-Chief of NewsBlaze Daily News and other online newspapers. He prefers to edit, rather than write, but sometimes an issue rears it’s head and makes him start pounding the keyboard. Alan has a fascination with making video and video editing, so watch out if he points his Canon 7d in your direction.