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Businesses should be wary of requests for money

On behalf of Kadish & Associates Law Group posted in Business Litigation on Wednesday, August 2, 2017.

Companies that do business in Phoenix, Arizona, want to make money. Most do so ethically and legally. However, when a company operates in a way that is neither ethical nor legal, they may be guilty of fraud.

One example of that is a company that represented itself as a government agency in order to con businesses in Arizona to pay what it said was a required government fee. When the Arizona Attorney General’s office found out, it obtained a consent judgment against the company.

The company was based in Michigan, but chose to defraud businesses in Arizona. It did so using an unregistered trade name, “Corporate Records Service.” Under that name, it mailed out 65,000 notices to Arizona businesses. The notice told the businesses that they had to pay a $125 fee that was referred to as the “Annual Minutes Requirement”.

1,700 of the businesses who got the notice responded to it, according to the Attorney General’s office. A judge of the Maricopa County Superior Court found that the notice was deceptive because the company that sent it was posing as an official government agency. The company was also telling businesses that the $125 fee referenced in the notice was mandatory. The judge rejected the company’s claim that their disclaimer, which was a part of the notice, counteracted the notice’s deceptiveness.

Because of what it did, the company now has to pay big fines. The first fine is $175,000, which is a restitution fee for consumers. The second fine is $125,000, which goes to the state as civil penalties. Finally, the third fine is $100,000, which also goes to the state and covers attorney fees.

The Arizona Attorney General said that all of the businesses that paid the fee will get the opportunity to receive a full refund. Those businesses believed that they were paying an actual fee, but that actual fee is $45, not $125, and the company that sent the notice has nothing to do with the collection of the real fee.

Businesses in Arizona should carefully check out every request for money that they get. If they are defrauded, they should report that to the government and contact an attorney.

Source: The Republic, “Lawsuit over mailer asking Arizona businesses to pay fake fee settled,” Kelsey Mo, July 27, 2017

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