We’re not from the government, but we’re here to help

Dear Mary, I incorporated my business a few months ago and today I received a letter that looked very official. It didn’t actually say whether it was from the state, but it said that I’m required to register and make some kind of statutory filing. What is this about? Why is it so expensive?

I often receive these notices after forming new business entities for clients. They come in the mail, and can look very official. At first glance, they appear like they come from the California Secretary of State, or another agency, but really, they are from a private, third-party organization. Like other business scams, these solicitations are sometimes sent from criminal enterprises and responding can trigger further fraud attempts against victims.

These solicitations typically ask for an exorbitant fee for something they say is required. The one I see frequently states that the addressee must comply with California Corporations Code Section 1502.1, “Statutory Filling” (the typo is theirs, not mine). For the mere annual cost of a few hundred dollars, they’ll take care of this compliance “requirement” on my behalf.

In reality, the Secretary of State provides nearly every form you could possibly need to file, including instructions on how to file them. Would you rather pay an unknown organization $495 to file a simple one-page Statement of Information form, or complete the form yourself and pay the nominal $20 to 25 filing fee?

Another direct-mail scam involves services that offer to prepare corporate minutes. Yes, corporations are required to prepare annual meeting minutes, but those minutes are not filed with the Secretary of State. We recommend that an officer, director or a business attorney prepare or review minutes.

The first thing to examine on a potentially deceptive notice is the sender. Look for fine print that says something like, “This service has not been approved or endorsed by any government agencies.” Does it require payment to anyone other than the Secretary of State?

All of the notices I’ve seen quote or paraphrase the actual California Corporation Code in a manner that makes it looks rather menacing. If you read the notice carefully, you might find it full of typographical or grammatical errors.

Be careful of these forms, as they really can appear official and they are incredibly misleading. Of course, if you’d rather pay someone else to take care of these filings, there are several reputable service providers, but the Secretary of State accepts mailed and in-person submission of forms directly by the person or entity.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached atmary@hudsonluros.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.