BBB warning: No, that document did not come from the government
Business owners have a lot on their plate. So, it is no surprise that a lot of them are falling for deceptive mailings that leave the impression they came from a government agency or are in some way required by the government.
The Better Business Bureau Serving Western Michigan and various state agencies have been warning businesses about these mailings for years, but they keep coming. And there is a simple reason they keep coming: they work.
For example, in July, the Michigan Attorney General filed a lawsuit against a Florida company called CA Certificate Service, which is doing business in Michigan as MI Certificate Service. The business model is simple. They get a list of all the new LLCs filed with the state of Michigan and then mail those companies an official-looking form. This form contains barcodes, information about the LLC obtained from the state and the following language:
“Congratulations on registering your business with the State of Michigan. Your Articles have been filed with the Secretary of State and are complete. You have one step left in order to attain your elective Michigan Certificate of Good Standing.”
The notice goes on to say:
“A Michigan Certificate of Good Standing is issued by the Secretary of State and may be required to obtain loans, to renew business licenses, or for tax or other business purposes. A Certificate of Good Standing certifies that your Michigan business is in existence, is authorized to transact business in the state and complies with all state requirements. The Certificate of Good Standing shows the official evidence of an entity’s existence and provides a statement of an entity's status, current legal name and date of formation. The Certificate of Good Standing bears the official seal of the Michigan Secretary of State.”
After reading that, it's no wonder new business owners think they need to respond and get this Certificate of Good Standing. Several businesses have complained that this mailing implies the business won’t be able to get a loan or renew their license without this form. Not only does the form itself look official, it twice mentions that this Certificate of Good Standing is issued by the Secretary of State. Who else would be sending you information like this?
The truth is, this certificate is optional for businesses. Anybody who responded to this offer was required to pay this company $72.50. The state of Michigan charges just $10.
To be clear, there is a legitimate industry of businesses that work to help other businesses navigate government bureaucracy. Many small business owners are experts in their specific field. But just because you are an amazing roofer or clothing designer does not necessarily mean you have a full understanding of state business filing requirements.
Many new and small businesses do need help. So, it makes sense that there are businesses designed to provide that help and that these offers come with a financial cost. However, companies need to be up front about who they are, what services are being provided and the cost of these services.
Unfortunately, a number of solicitations like this are worded in such a way to be deceptive. Attorneys general from across the country have filed lawsuits and cease and desist notices to a growing list of businesses who send mailings very similar to this. Several of those businesses claim to be located here in Michigan and target businesses in our community and around the state.
The Better Business Bureau fields several complaints a month about companies that sell labor law posters or offer to file various corporate documents. In most cases, the services offered are available for free or at a much lower cost than advertised.
These offers appear to hope that businesses mistakenly believe that if they don’t fill out this specific form and pay this amount, they will get in trouble with the state or federal government. It just isn’t true.
The Better Business Bureau wants business owners to be aware of these schemes and to use caution when they get mailings they don’t recognize. Before you sign something and send money, double check to make sure it is legitimate. Call the state agency and ask if the service or item offered is needed and how much it should cost. Businesses also can call the Better Business Bureau, where our staff is happy to help answer questions.
Troy Baker is the communication manager of the Better Business Bureau Serving Western Michigan. The BBB Serving Western Michigan is headquartered in Grand Rapids and serves 38 counties in the western half of the Lower Peninsula.