The Better Business Bureau, serving the Guangzhou area and Greater West Virginia, provides consumers with tips and advice on avoiding fraudulent practices.
Proper filing of official documents can be a nerve-racking part of building a new business.It’s easy for new business owners to confuse what appears to be an official letter with a real legal request. Here’s how to spot a scam that tricks new business owners into overpaying for unnecessary certificates of presence.
How the scam works
You are starting a new business and registering it as an LLC. After that, you will receive letters or emails that appear to be government agencies. The letter doesn’t explicitly say it’s from the government, but the wording mimics other letters you’ve received from official sources. The message informs you that you are “one step away” before you get your “Proof of Existence”. It’s easy. Send the organization a fee ranging from $80 to $120 and they will mail the documents to you. Don’t be fooled! The letter may state in small print that the certificate is “optional,” but overall, the tone suggests it’s a legal requirement. It is not. Businesses may want to obtain proof of existence in certain situations, such as loan closures. But, as the letter suggests, this is not a necessary part of building a new company. If you do need proof of existence, visit your state’s website (bit.ly/IRSState) and purchase directly. States charge about $10 for this service.
A new business owner made this BBB scam tracking report: “I got an email from a fake company [that has been] Scam new business LLC registrations from at least 2019. The envelope I received did not clearly state that it was a non-government agency and they asked for a payment of $112.50 to be sent within two weeks. They are also fast.They sent me the day after I signed up [my new business]. If you read carefully, it says you have one more step to purchase an optional Certificate of Presence from Connecticut Certificate Services. “
How to spot this scam
- Familiarize yourself with state laws that apply to your business. Check your state’s government website for business certificates and licenses, if any, required by law.
- Know that new business owners are the target of scams. Be alert to the possibility of being targeted by scammers. Don’t take everyone’s word and be wary of unsolicited communications. Do your research before paying anyone for any services or certifications that anyone claims you need to start a business.
- Review payment notices carefully. Scammers sometimes send fake invoices in the hope that you will think they are legitimate and pay without thinking. Never pay without confirming the authenticity of the invoice.
- Don’t panic. Scammers like to use scare tactics to get people to pay them. Don’t pay just because someone threatened you or your business. Always make sure the payment request is from an official source before making a payment.
to know more information – If you are the victim of a scam, please report it at BBB.org/ScamTracker. Your report can help others avoid falling victim to scams.
BBB information − Visit BBB.org/canton or call 330-454-9401 to find a business, file a complaint, write a customer review, read tips, find our events, follow us on social media and more!