Time to Startup!

The BizFilings blog covering business tips and trends.

Compliance Solicitation Scam: What You Need to Know

Published on Sep 9, 2013


Read 'Compliance Solicitation Scam: What You Need to Know' at 'Time to Start Up,' the small business blog by BizFilings.
As you may have recently read, small business incorporation owners and corporations are being targeted for solicitations for preparing ‘required corporate records.’ The scam, perpetrated by organizations called ‘Corporate Records Service’ or ‘Compliance Services,’ charge $125 – or more – for preparing the document by a certain date.   Entrepreneurs – who are often under tremendous amounts of stress, juggling several responsibilities and wearing many hats – may be so busy that they are easily tricked into thinking scams are just another obligatory form or fee required by a state government agency. If you’ve incorporated a business, we urge you to be aware of these and other fraudulent solicitations.   Fraud comes in many forms – aside from the compliance solicitation scam – that business owners should be aware of, including the IRS’s ‘Dirty Dozen,’ credit card and check fraud, telemarketing scams, investment scams and vendor frauds – to name a few. Avoiding fraudulent solicitation is more difficult than you may initially think so keep in mind the following after incorporating a company: Warning! Scam!
  1. Perform due diligence: Regardless of how official the paperwork may look, if you receive mail asking for payment, read the contents very carefully prior to sending money.
  2. Take your time: If you feel you’re being pressured, or there is an opportunity that’s too good to be true – there’s probably a reason. No legitimate business should require you to drop everything and make a monetary commitment on the spot.
  3. Know your rights: As a small business owner, you should always ensure you are fully aware of your legal rights – making a mistake could ruin you, or your incorporation. Do your research before signing on the dotted line!
  4. Don’t be emotional: Don’t allow yourself to be guided by emotions – or ignorance. Although you may be desperate for funding, or are in debt, don’t allow your current state to cloud the decision-making process. Quick, emotional decisions could ultimately put you in a worse spot financially down the road.
  If you believe your small business incorporation has been the victim of a fraudulent solicitation by Corporate Records Service, Compliance Services, or any other organization, be sure you contact the Office of the Attorney General in your respective state. Moving forward, it is essential to rely on organizations with legitimate expertise – such as BizFilings, CT Corporation, and NRAI – to assist you and your incorporated company in understanding the compliance filings – as well as other requirements – specific to your incorporation type and location. If you receive an inquiry from a customer regarding a compliance solicitation or any other potential scam, please advise them to contact their appropriate Attorney General as well. If necessary, consult your accountant. Unfortunately, well-executed scams often occur during the tax-off season, when owners of incorporated businesses are not regularly in contact with financial advisors – and mistakenly send money without questioning the fee.