NC businesses tricked into paying fees will get refunds

NC businesses tricked into paying fees will get refunds

By / State News / Monday, 25 July 2016 04:00

RALEIGH, N.C. : July 21st, 2016 - North Carolina small businesses that responded to deceptive mailings telling them to pay $125 to comply with corporate records law will get their money back, Attorney General Roy Cooper announced July 21st.
“Small businesses are critical to North Carolina’s economy, and they don’t deserve to be tricked out of their hard-earned money,” Cooper said. “My office took action to make sure business owners get their money back.”
This week, Wake County Superior Court Judge Donald Stephens approved a consent judgment barring Corporate Records Service (CRS) and co-owners Steven Fata, Thomas Fata, and Joe Fata from engaging in misleading or deceptive trade practices in North Carolina. The defendants must comply with strict rules for any future mailings, including a ban on the use of certain words or symbols that make it appear that a letter is urgent or that CRS is connected with the government.
CRS is also ordered to offer refunds to affected small business owners within 30 days, and to pay $10,000 to North Carolina to cover litigation costs and consumer protection efforts. CRS will send letters to all eligible businesses telling them how to claim their refunds.
A total of 345 North Carolina small businesses and nonprofits responded to the CRS mailings, paying $125 each. Any that have not already gotten their money back will be eligible for refunds under the judgment.
Cooper contends that CRS sent deceptive mailings to North Carolina businesses directing them to complete a form and submit it along with $125 in order “to satisfy the annual records requirement for your corporation.” The letters instructed businesses to send their forms and fees to an address in Raleigh, which turned out to be a rented mailbox.
As outlined in Cooper’s complaint, CRS mailings referenced record-keeping provisions of the North Carolina Business Corporations Act, which is enforced by the North Carolina Secretary of State.  While state law does require corporations to keep some records internally, such as minutes of shareholders or directors meetings, those records need not be filed with the Secretary of State, and completing the form mailed out by CRS does not meet those requirements. The North Carolina Secretary of State’s Office does not issue letters like the ones sent by CRS.
Cooper has fought misleading mail schemes that target small business owners for years. In 2015, Cooper and North Carolina Secretary of State Elaine Marshall warned North Carolina businesses to avoid deceptive letters from a Florida company called Division of Corporate Services. In 2012, a California company called Corporate Services, Inc. sent letters requesting official records from business owners. In that case, the company was barred from operating in the state and returned $90,000 in checks it had collected to small businesses across North Carolina.
“Most businesses work hard to comply with the law, and unfortunately scammers try to take advantage of that by pressuring them to pay fake fees,” Cooper warned. “Avoid these scams by reading invoices and other requests for money carefully before you pay.”
To check on the status of a corporation, limited liability company, or other business entity registered at the North Carolina Secretary of State's Office or learn about records businesses are required to keep, visit sosnc.gov or call the Corporations Division toll-free at 1-888-246-7636.
Businesses or consumers who receive questionable letters from someone claiming to be a government agency are encouraged to contact the Attorney General’s Consumer Protection Division at 1-877-5-NO-SCAM toll-free within North Carolina. You can also file a consumer complaint at www.ncdoj.gov

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