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The Better Business Bureau, serving the Canton region and Greater West Virginia, offers tips to help consumers avoid fraud.
Filling out the official paperwork correctly can be a nerve-wracking part of setting up a new business. New business owners can easily confuse official-looking correspondence with genuine legal requirements.. Here’s how to spot a criminal tricking new business owners into paying for an unnecessary certificate of existence.
How the scam works
You start a new business and register it as an LLC. After that, you will receive a letter or email from what appears to be a government agency. While the correspondence does not claim to be directly from the government, its wording is similar to other letters received from official sources. The message informs you that there is “one step left” before receiving the “Certificate of Occupancy”. It’s simple. Send the company a fee of $80 to $120, and they will mail you the document. Don’t fall for it! The letter may state in the fine print that the certification is “optional,” but generally, the tone indicates that it is a legal requirement. not at all. Businesses may need to obtain a certificate of existence in certain situations, such as foreclosure. However, as the letter indicates, it is not a necessary part of establishing a new company. If you need an existence certificate, visit your state’s website (bit.ly/IRSState) and purchase one directly. States charge $10 for this service.
A new business owner submitted this BBB Scam Tracker report: “I received a letter from a fake company [that has been] Fraudulent new business LLC registrations since at least 2019. The mail I received did not clearly state that it was a non-governmental organization, and they asked for $112.50 to be sent within two weeks. They are fast. They mailed this to me the day after I signed up. [my new business]. If you read carefully, it says that there is one step left to purchase an optional Certificate of Existence from Connecticut Certificate Services.
How to identify this fraud
- Know the state laws that apply to your business. Check your state’s government website to find out what business certificates and licenses are required by law, if any.
- Know if new business owners are the target of scams. Be aware of the possibility of being targeted by a scammer. Don’t take everyone at their word and be wary of unsolicited communications. Do your research before paying for any service or certification that anyone says you should do for business.
- Review paid ads carefully. Fraudsters sometimes send fake invoices, claiming they are legitimate. Never pay an invoice without verifying that it is genuine.
- don’t panic. Scammers like to use scare tactics to get people to pay them. Don’t make a payment just because someone threatens you or your business. Always make sure the payment request is from an official source before paying.
For more information – If you are a victim of a scam, report it at BBB.org/ScamTracker. Your report can help others avoid becoming victims of fraud.
For BBB information – Visit BBB.org/canton or 330-454-9401 to search for a business, file a complaint, write a customer review, read tips, find our events, follow us on social media and more!
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