Official-looking mailers are popping up around the state demanding people pay a company a large fee or face losing a business. Now the attorney general is investigating because these letters are not official and you do not have to pay.
Scott Davaly set up his own limited liability company to manage his property in Berkeley. The process was quick and cheap.
"Every other year, the state sends out a form and you send them $20 and that's it," he told 7 On Your Side.
So, he was shocked when he got a form in the mail that seemed to be from the secretary of state, and said he had to pay $239 right away or his company would face penalties, fines and suspension.
"I freaked out. I was, 'What is this? They're going to send me all this, you know, stuff saying I had to pay more money.'"
It looked like the real deal. At the top it said "Business Filings Division" and it had an official-looking seal. Still, things did not add up.
"I just started questioning it because it just didn't seem right," Davaly recalled.
First, his LLC is not even up for renewal until December 2010. Second, the filing fee is supposed to be $20, not $239. Third, the form said strange things like "losing your corporate existence will have many negative ramifications."
"And, on the front it says 'remit immediately, remit immediately, remit immediately,' and it says all the things that can happen to you if you don't send them money. The whole thing was bogus basically," Davaly said laughingly.
So, he called /*7 On Your Side*/. It turns out that "Business Filings Division" is a company in Sacramento. Nobody responded to 7 On Your Side's calls. Just voicemail.
The secretary of state believes hundreds of businesses have received these mailers warning of dire consequences if they do not send money. It is not clear how many paid or if any forms were actually filed on anyone's behalf. The secretary of state issued a consumer alert about the misleading solicitations and the attorney general is investigating.
There is nothing illegal about charging money to file someone's documents. But, you do not need to pay when you can do it yourself. Hundreds of people returned that mailer with the $239 fee, but thankfully they sent it to the secretary of state and not to that company.
The secretary has returned all of that money to the businesses.