New Jersey Business Filing Services: Scam or Not?
Update: I can’t believe this. I received a second notice from these hustlers — asking for even more money! Read the details at the bottom.
Here’s an idea for all you people who like to “hustle” to come up with ways to earn extra income. This has happened to me many times, and it comes it many forms. So far, I haven’t fallen for what I think is at worst a scam, but sometimes, one could argue, is a legitimate way to provide a service. I almost fell for this latest attempt, however, because it involves the nonprofit organization I recently formed. This business solicited me using a fairly popular and likely lucrative technique, which is basically as follows:
- Receive lists from state governments that contain newly registered businesses.
- Offer to provide a business-related product or service normally offered by the state, for a significant mark-up.
- Give your business a name that can be easily confused with an official government entity.
- Prepare and send through the mail a solicitation that looks like a bill or an invoice.
- Provide a deadline and create a sense of urgency.
I have to imagine that a good number of business owners respond to these solicitations believing it is part of a government requirement. After all, there tend to be many government requirements when you file paperwork for a new business. There are two ways to look at these businesses that take advantage of people’s fear or apprehension of non-compliance with government. If you tend to believe that there’s a market for everything and all bad aspects of economies sort themselves out on their own, you will see this as a business simple providing a service to make money, catering to a specific market — even if that market consists mostly of people who are unsuspecting and ready to part with their money without doing much research.
On the other hand, you might see this as a sleazy and manipulative sales tactic, coming awfully close to impersonating a government official. Here is the most recent solicitation I received in the mail.
I didn’t scan the envelope before throwing it away, but it looked similar to envelopes I’ve received in the past from the state government. But all number 10 envelopes with address windows tend to look the same, anyway. I saw the name of the business in the return address as “New Jersey Business Filing Services,” so it immediately sounded official, but I am by nature somewhat skeptical. The mailing address was my first hint that something wasn’t right. An official state government organization should be based in Trenton, not East Windsor (where I grew up). But people living elsewhere in the state may not be familiar with the geography to know that this was not likely to be a state government address.
As you can see from the “bill” in the envelope, the New Jersey Business Filing Service’s designer did a good job of making the solicitation look like a bill from the government.
“Certificate of Good Standing.” First, in the top right, there is a reference to a “Certificate of Good Standing.” This is a legitimate type of document you can order from the state government. It’s not generally a necessary document, though it’s possible that you would have some business partners who might ask for it. It is, however, absolutely free to search the state’s business directory and determine the status of a corporation’s standing.
“Important! Follow instructions exactly when completing this form.” This notice under the address gets the readers attention, and directs him or her to read the instructions in fine print in the middle of the page. This equates the form with the government, because of the heightened importance of completing government forms accurately and honestly. Citizens generally understand there could be penalties for making mistakes on official forms; and this gives the reader the idea that the same might be true here.
Business identification number. This “bill” contains my business’s identification (ID) number in several places. The business ID number is assigned by the state government, so this easily puts the idea in the reader’s head that this is an official government bill. After all, how else would someone know your business’s identification number? It’s actually simple — the numbers are public, and anyone can find the identification number for any registered business in the state. Its presence on the form gives the impression of government authenticity. In any solicitation for a service, there would be no need to include a business’s own state identification number.
Dates in boxes. This is a standard feature on all invoices. Invoices are issued for services purchased or rendered, and are usually issued once an agreement has been made to purchase a product or service. By including two dates in boxes, with one being a larger date similar to a due date, this gives the impression that this is an invoice for an all ready agreed-upon transaction. “Don’t you remember making this agreement? Here’s what you owe.”
Bar codes. I covered up the two bar codes in this solicitation, one in the middle of the page and one on the remittance voucher, because I my bar code reader couldn’t decipher the message. It could simply be a pattern designed to look like a real bar code, or it could be an encoding of personal information. Either way, it has the same effect: it adds an impression of legitimacy to the mailing.
Remittance voucher and self-addressed return envelope. The lower portion of this solicitation is a remittance voucher. This is a common feature of bills sent through the mail. It signifies to the reader that he or she already owes the amount listed as the price of the product or service, and someone is waiting for that payment.
“The Certificate of Good Standing bears the official seal of the New Jersey State Treasurer.” This statement is the last, and probably most often read, sentence of the solicitation’s text. Combine that with the first sentence: “Congratulations on registering your business with the State of New Jersey.” These two statements together sound as official as any communication actually from the State of New Jersey would sound.
Form numbers. In small print at the bottom of the solicitation are some letter and number combinations that look suspicious. The government tends to include form numbers and revisions on their official applications and forms. For example, Form 1040-NJ is the form number used for one of the many forms available for filing state income tax returns. This is form “DR-392.” There is no need for this to be on a solicitation. It’s simply there to make the letter look official.
The same is true for the text that says “R.01/14.” This could mean this letter was last revised in January 2014. And perhaps that is true. But there’s no need to include that on a solicitation. There are reasons for state or federal governments to include revision numbers on forms and applications.
Despite all the above attempts to fool readers into thinking this is an official government notice, there is, however, one sentence on this solicitation that could help readers understand not only that this is not coming from an official government source, but it also not a necessary service. The solicitation includes the following text:
This product or service has not been approved or endorsed by the government, and this offer is not being made by an agency of the federal or New Jersey government.
Enough said. Or is it? I believe that most people will ignore this warning as they quickly complete this order form, as they are accustomed to doing for official state business, particularly when it comes to state taxes.
A short form standing certificate from the State of New Jersey is $50 for LLC and LLP organizations or $25 for other corporations, and you can order one for any company registered in the state. What this company, the “New Jersey Business Filing Services” company, is doing, is taking $74.98 from customers, ordering a $50 or $25 short form standing certificate, and passing it along to the customer. That’s a 50% or 200% mark-up, or not a bad business idea. The company is also offering a “package containing agreement templates for your business,” so they are potentially adding some value. That may be worth the additional $24.98, but certainly not $49.98. In fact, you can easily find free agreement templates online. What this company provides likely won’t be any better than what’s available online, and definitely wouldn’t be better than what your business attorney might write up for your business specifically.
When I received this envelope in the mail, I opened it right away. I’m eager to comply with any type of requirement by the state so I can continue doing business. I knew right away this was not a communication from the state, and I knew I had better options for what this solicitation was offering. I saw right away that this wasn’t a real invoice or a bill despite the company’s attempts to emulate one.
So is New Jersey Business Filing Services a scam? Well, it’s certainly misleading. There’s a disclaimer that should prevent people from calling it an outright scam, but I’d say it’s borderline. It’s a for-profit business, and the owners are just trying to use whatever tools are available and legal to earn a profit.
But business owners should be on the look-out for solicitations like these.
March update: I received a second notice asking for more money!
A month later, I received the same notice. They are truly trying to get me to spend money completely unnecessarily. I hope other business owners aren’t duped into paying “New Jersey Business Filing Services.”
This second notice has a new response date — March 14. The bottom of the form notes “R.01/15,” which I assume represented a more recently updated version of the form. But instead of asking for $74.98, these vultures are asking for $98.99! The same document costs a lot less money if you order it right from the State of New Jersey.
I wonder whether I’ll receive another notice after this new “deadline” passes, asking for even more money.
Please business owners, don’t fall for this.