Beware Deceptive Marketing Practices
Targeting Small Business Owners
As a small business owner, you will, no doubt, be subject to a variety of marketing ploys to garner your attention. In particular, your mail will contain a variety of different notices from credit card applications to computer software deals. As a new business, you may receive letters from the state or other important entities to assist you, as well. How does the small business owner know how to distinguish between legitimate or important emails from state agencies (or even your attorney), versus marketing solicitations or worse?
Have you seen envelopes like this?
Beware important or official looking postal mail — it may be nothing more than a misleading marketing tactic.
At first glance, these envelopes look like they contain very important information. Notice the urgency in the words contained on the envelope, and the official-looking format of the letter contained within (see below)? They’re deceptive (or at least very misleading) marketing strategies aimed at getting your attention and access to your pocketbook. All across the country, small businesses are falling prey to such marketing tactics. National Corp Research, LTD, maintains a fairly comprehensive, state-by-state list of potential scams or otherwise misleading solicitations to new businesses, which can be found here: Misleading Annual Report and Compliance Solicitations.
Here’s an example of what an official-looking letter might look like, yet it’s complete nonsense:
When you receive official-looking documents, call your attorney to verify their authenticity.
Aside from causing small business owners to incur an expense they may not otherwise intend, they can actually cause great harm to a business or the business owner.
In the example above, annual minutes are not required of limited liability companies (yet these solicitations are mailed to LLC owners every day). By filling this out, the business owner creates documentation related to their business, that could potentially be used against them in a lawsuit (i.e. by enabling a piercing of the corporate veil or worse). Additionally, in New Mexico and other states, the ownership information or director information is not public knowledge, but this form could turn such information into public information.
This form can create issues for C-Corporations or S-Corporations too, if the owner fills out this form without the proper corporate authorizations. This can create unintended consequences from a liability standpoint.
Your website and domain name(s) can fall victim
As another example, the Better Business Bureau rates the Domain Registry of America a “F” (see the BBB article) because they use similar deceptive postal mail campaigns to try to convince domain name owners to switch to them. Not only do they charge very high prices, completing their form actually “transfers” your domain name to them, and as you can see from their BBB rating, their customer service is tragically poor — they actually make it very difficult to leave them, once you switch over to them.
Beware official-looking postal mail
Many of the deceptive mail solicitations rely on legal compliance. The layout of the forms look very similar to official documents you might otherwise expect from the state, the IRS or some other governmental agency. These solicitations will even quote specific statutes, making them sound very important or even illegal if you disregard the notice.
Understandably, as a new business owner, there are documents you must file; however, there is no government agency that would demand you pay for these types of services, and if they do, then the documents would be sent with an official state seal. For example, in New Mexico, almost all corporate filing documents and instructions can be found (and verified) online. Before you fill out any forms or send any checks, either perform a quick Google search for the company, contact the relevant governmental agency, or double-check with your attorney. You can even contact us at here at L4SB, and we will verify the authenticity for you. Don’t let such deceptive marketing tactics bowl you over.
As always, we are here to help. Contact us with any questions or concerns.