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Government incidental fee scam earns small businesses millions

Scammers have found a new way to defraud American small business owners out of millions of dollars: impersonating the government.

Washington State Attorney General Bob Ferguson, a Democrat, announced Thursday that he is suing two companies that used online public records and state registration requirements to scam more than 15,000 contractors out of a total of $1.2 million.

The companies cleared $3.6 million nationwide from the scam and sent at least 210,784 letters to Washingtonians since March 2019, according to the lawsuit filed in King County court.

“Small businesses fuel our economy,” Ferguson said in a statement. “With this lawsuit, I intend to recover the money from the affected business owners – with interest.”

Several times a week, the complaint says, Michigan-based CA Certificate Services collects small business addresses directly from state government websites in Georgia, Michigan, Minnesota, Nevada, Ohio, from Utah, Virginia and Washington.

Using an envelope with a localized address that mimics government documents, the company sends a request for $82.50 to thousands of businesses, telling them it’s a “certificate of status or a poster in the workplace to stay registered in their state.

In its mailings to Washington, the company calls itself “WA Certificate Services” and includes a state address to appear legit.

The lawsuit adds that another company, Labor Poster Compliance, sent 16,000 “invoices” to Washington businesses charging them $79.25 for a workplace labor poster that it says is mandatory. This company made over $25,000 from the letters.

Mr. Ferguson is asking the court to order the two companies to pay restitution, attorneys’ fees and civil penalties of up to $7,500 for each violation of the Consumer Protection Act.

Victim owners do not know that the state does not charge for registration.

“A King County resident wrote that she requested a refund from the company shortly after sending her check in November 2019, but does not recall receiving it,” Mr. Ferguson in Thursday’s release.

The Washington lawsuit follows lawsuits the attorneys general of Michigan and Virginia and the Utah Department of Commerce have filed against the scammers.

Virginia’s lawsuit against CA Certificate Services, filed last year in the City of Williamsburg Circuit Court, said the company was posing as “VA Certificate Service” or “Virginia Certificate Service” in the state and was using the address of a UPS store that sends payments. to scammers.

Victoria LaCivita, a spokeswoman for the Virginia Attorney General’s Office, said Friday that small business owners should always contact government agencies about any unsolicited communications to see if supposed services are actually free.

“Businesses should be wary of postal mailings, phone calls, or e-mail solicitations that appear to be from a government agency, that ask for a fee to file documents with a government agency, or that ask for a fee to obtain records from a government agency,” Ms. LaCivita said.

The National Federation of Independent Businesses, a Nashville-based association of small business owners, said Friday the scams are putting more pressure on entrepreneurs already struggling with a range of pandemic-related issues.

“With inflation, labor shortages, supply chain issues and rising fuel prices, small businesses face many challenges. Potential scams and fraud against small businesses make it even more difficult for them to operate, and any allegations of scams and fraud should be thoroughly investigated,” the NFIB said in an email.

CEO Alfredo Ortiz of the Job Creators Network, a conservative small business advocacy group, said small businesses often have a harder time catching scams.

“A larger company would have more resources, probably even some form of legal team, to make sure they don’t fall victim to such a scam,” Mr. Ortiz said. “But most small business owners have to wear many hats, manager, accountant, HR, marketing, etc.”