Last month, 43,090 new businesses were formed in California. I registered my own LLC early last year to protect me legally and financially. The paperwork was good for two years.
So imagine my surprise when I received an official-looking renewal form in the mail today. Form 501-LLC was my California Limited Liability company biennial order form, and it came a year early.
Color me puzzled.
Reading further, I saw a $243 processing fee, with deadlines, statutes, and penalties mentioned. Only the paperwork wasn’t from the California Secretary of State, but the Corporate Processing Service.
And for this $243, CPS would send my information to the appropriate state office with a $20 payment.
Obviously, I’m better off doing that myself without the middleman.
CPS’ gambit was simple; acquire a list of LLCs from the state, send an official-looking document that scares the hell out of the recipient, and hope they’re not really paying attention.
Given that corporate registration information is public, it’s fair game for anyone else wanting to try the same stunt. And since CPS clearly states they’re an independent third party, they’re probably not breaking any laws.
Sadly, people don’t read much anymore, making it a perfect environment for such parasites. Information overload, time shortages, and minimal attention spans conspire to cheat entrepreneurs out of their hard-earned money.
CPS also has a minimal investment; one sheet of paper, a #10 envelope, a carrier envelope, mailing list, and pre-sorted first-class postage. It’s an easy business to manage, with a low barrier to entry.
Neither Corporate Processing Service nor parent company Corptech Management has a website, email, or phone number. They don’t accept credit cards, and never have to deal with customer complaints. They also ignore the charges against them at the Better Business Bureau.
Pretty slick, huh?
There are undoubtedly many business owners who receive this mailer, panic, and send in their money. They’d rather be safe than sorry, and don’t know enough or look carefully enough to recognize when they’re being hustled.
Yet, if they just took an extra minute to ask why they’re paying that invoice, they’d be able to keep more of their hard-earned money where it belongs.
So consider this fair warning: before you pay any invoice or government fee, make sure it’s legitimate.
With that said, I wish you a week of profitable marketing.
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