Orange County CA Business Owners Continue to Face “Annual Minutes” and other Corporate Records Scams

As a shareholder of a corporation in California, you may receive a notice requesting the filing of a form and payment to the tune of hundreds of dollars to keep your corporate records up-to-date. If so, you could be exposed to a scam. Read this post to learn how to recognize these corporate records frauds and what to do if you receive one of these notices. And if you need assistance, contact an Orange County small business attorney for help with your corporate records.

Corporate-records-scams-warningHere at Gale and Vallance, we recently received several deceptive solicitations concerning corporate records compliance. These rather official-looking notices are addressed to our clients, via our office. One client received the notice at his place of business and was not sure if he should pay it. Fortunately, he stopped by our office to ask, only to find out that the notice was a scam.

Others who receive similar notices in the mail may not be so lucky. If they don’t look closely at the letter, they may not realize the deception. Then they end up getting swindled, sometimes out of hundreds of dollars, when a third-party company charges them exorbitant fees to complete tasks normally costing much less to complete on the state’s website.

How to Spot a Scam

Scam-certificate-of-status-orange-county-business-attorneyA simple Google search will often result in a list of websites displaying past ratings and reviews of the company in question. By entering search terms like “California corporations code compliance scams” or “corporate records scams,” you might also find web pages that include information about these businesses. Beyond that, many of these companies have multiple complaints filed against them with the Better Business Bureau.

These sham companies prey on busy entrepreneurs who may not look closely enough to recognize these letters as fraudulent. Mailed out from Sacramento addresses, their business names closely resemble those you might expect from a state agency – for example, “Corporate Records Service” or “Corporate Compliance Center.” One company’s notice closely mimics a form issued by the secretary of state and displays a logo nearly identical to that of California’s official state seal.

These letters also include warnings that urge business owners to pay them by a specified date to avoid suffering dire consequences. The messaging and design used in these documents are expressly meant to instill a sense of fear in recipients, mimicking official state documents and prompting business owners to mail payment without thinking or asking questions.

Some of the solicitations contain grammar and spelling errors as well, something not typically seen on official state documents.

Service Agreement Clauses

corporate-compliance-scam-service-agreementSome of these scammers indicate that the use of their service constitutes acceptance of their service agreement. In the case of Corporate Compliance Center, the service agreement clause is located on the back of the notice. Many people may fail to see it before signing the front of the document and mailing it in with the requested fee.

This service agreement “prohibits you from taking any action that negatively impacts C.S.C., its reputation, products, services, management or employees.” So once you discover the scam, assuming you paid their fee, the company essentially prohibits you from complaining about it. Of course, this represents an infringement of free speech and is legally unenforceable. But you might ask yourself what kind of business would prohibit complaints about their service or product when they sell it to you.

The service agreement clause also requires that you give up the right to go to court in favor of binding arbitration. So victims of the scam have limited recourse.

corporate-records-scam-annual-statement-of-information-noticeYou Don’t Always Get What You Pay For

In many cases, the crooks include language in their letters implying that once you pay them, your corporate record-keeping has been completed for the year. Nothing could be further from the truth, however.

California Takes Action against Fraudulent Solicitations

Fortunately, the state of California recognizes the need to strengthen legislation that protects consumers from such fraud. The California Secretary of State’s website displays a customer alert for those representing businesses (see the full text here or visit Furthermore, they have passed legislation to combat these scams.

CA-laws-corporate-records-scams-orange-countyIf you read the letter you received, you will find a message located at the bottom of the page stating, “THIS PRODUCT OR SERVICE HAS NOT BEEN APPROVED OR ENDORSED BY ANY GOVERNMENTAL AGENCY, AND THIS OFFER IS NOT BEING MADE BY AN AGENCY OF THE GOVERNMENT.” This disclaimer is required by law as of January 1, 2012, for these third-party mailings.

That same law also makes it illegal for the soliciting companies to use a name that recipients might mistake for a government entity. Each violation is subject to a fine of $2,500.

What to Do if You Receive a Fraudulent Corporate Records Notice in the Mail

The secretary of state’s office encourages recipients to report these fraudulent letters. Simply download a complaint form at Fill out the form, and then send it, the solicitation you received, the envelope, and all accompanying documents to:

California Attorney General’s office
Public Inquiry Unit
P.O. Box 944255
Sacramento, California 94244–2550

Please don’t send payment if you receive one of these fraudulent, third-party letters asking for money to perform tasks easily completed online for much less. If you have questions about these scams, or if you received a similar notice in the mail and are not sure of its legitimacy, contact Orange County business lawyer Andrew Gale.

If you would like to be certain that your corporate records get taken care of each year, ask Andy about our Corporate Records Program. Call today at +1 (714) 634-4860.


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