Protecting Your Business Entities from Fraud

May 22, 2024

In today's fast-paced business environment, entrepreneurs must remain vigilant against a growing array of scams targeting their operations. Among these, entity-related scams are particularly insidious, often leveraging sophisticated tactics to deceive business owners into paying unnecessary fees. Two prevalent schemes involve fraudsters attempting to extract extra payments for certificates of good standing or misleading businesses into believing they owe additional fees to the government.

The Certificate of Good Standing Scam

A certificate of good standing is a document issued by the Secretary of State (SOS) that verifies a business entity is compliant with state requirements and authorized to operate. Scammers exploit this by sending official-looking notices to businesses, claiming they must pay an exorbitant fee to obtain or renew this certificate. These notices often create a sense of urgency, warning of severe consequences if the fees are not paid immediately.

The Fake Government Fee Scam

Similarly, scammers also target businesses with fraudulent demands for supposed additional government fees. These communications often mimic the format and language of official government correspondence, making it difficult for recipients to distinguish them from legitimate notices. Business owners may receive letters, emails, or even phone calls insisting they owe extra taxes, fees, or penalties, pressuring them to make immediate payments to avoid legal repercussions.

Protecting Your Business

Rely on a verified Registered Agent

One of the most effective defenses against these scams is having a reliable registered agent. A registered agent is a person or entity designated to receive legal documents and official communications on behalf of your business. Here’s why having a reputable registered agent is crucial:

  1. Accurate and Timely Information: A good registered agent will ensure that all official communications from the SOS or other government bodies are promptly and accurately conveyed to you. They can differentiate between legitimate notices and fraudulent ones, protecting you from scams.

  2. Fee Management: Your registered agent is responsible for managing and reminding you of any fees due to the SOS. They often handle these payments on your behalf, ensuring that you meet all compliance requirements without falling victim to fraudulent requests.

  3. Expert Guidance: Experienced registered agents are familiar with the various tactics scammers use and can provide guidance and support if you receive a suspicious notice. Their expertise can help you navigate these challenges confidently, reducing the risk of financial loss.

Choosing the right Registered Agent

Given the critical role a registered agent plays in safeguarding your business, it is essential to choose one with a proven track record of reliability and competence. Here are some factors to consider:

  • Reputation: Look for a registered agent with positive reviews and a solid reputation in the business community.

  • Experience: An experienced agent will be more adept at identifying and handling potential scams.

  • Communication: Ensure that the agent has a system in place for timely and effective communication of important information.

Compliance Services: Some registered agents offer additional compliance services, which can be beneficial in maintaining your entity’s good standing with the state.


Entity-related scams pose a significant threat to businesses, but by being informed and vigilant, you can protect yourself. Remember, any official fees required by the SOS will be communicated through your registered agent, who will either remind you or handle the payments directly. Traact offers an array of services that can help and automate your entity management. You can choose from our experienced registered agents to make sure your entities are in good standing and your business runs smoothly.

Choosing a trustworthy registered agent is not just a regulatory requirement but a strategic decision that can shield your business from fraud and ensure smooth, compliant operations. Stay informed, choose wisely, and safeguard your business from these pervasive scams.

Talk to our experts to learn about Traact's entity management solutions.

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