Businesses deceived into paying three times the cost to file standard state annual reports
SEATTLE — Attorney General Bob Ferguson today filed a consumer protection lawsuit against two businesses and their owner for sending hundreds of thousands of deceptive texts and emails to Washington businesses and nonprofits. These deceptive text messages cost Washington businesses at least $163,000. The lawsuit is part of Ferguson’s Small Business Protection Initiative.
The large-scale, lucrative text and email scheme targeted Washington small businesses and nonprofits.
Ferguson’s lawsuit, filed in King County Superior Court, asserts the Wyoming companies and their owner, Cameron Groom, sent deceptive solicitations that were designed to appear as though they were sent by the Secretary of State.
Tens of thousands of text message solicitations demanded $200 to file annual reports with the Secretary of State. The texts did not disclose that businesses can file required annual reports directly with the Secretary of State’s Office for $60. For nonprofits, the cost is between $20 and $60, depending on the nonprofit’s annual gross revenue.
Other text solicitations demanded between $150 and $175 to file annual meeting minutes. Washington state does not require either to file annual meeting minutes.
Ferguson also filed a motion for a preliminary injunction to bar the companies from sending their deceptive solicitations to Washington businesses while his case continues.
In just over a year, EFile Business Inc. and Online Filing LLC sent more than 147,000 deceptive text messages to Washington businesses and nonprofits. More than 800 Washington companies paid EFile and Online Filing to submit annual reports at more than three times what it would have cost them to file the reports themselves. Ferguson expects to uncover even more businesses that were deceived by EFile and Online Filing through the litigation.
“As the people’s law firm, we will continue serving as a watchdog on behalf of small businesses,” Ferguson said. “My consumer protection division’s Small Business Protection Initiative has already won tens of millions of dollars for Washington businesses that were deceived by similar tactics.”
The Attorney General’s Office received 19 complaints about the businesses, and the Secretary of State received complaints, as well. The complaints prompted an Attorney General’s Office investigation beginning in May 2022. The Secretary of State also posted a notice warning about the deceptive solicitations.
Ferguson is seeking restitution for impacted businesses, plus interest, and civil penalties from the companies for their deceptive conduct.
Defendants sent deceptive, unsolicited texts and emails
Beginning in January 2022, the companies sent unsolicited deceptive spam text messages and emails to Washington businesses and nonprofits after obtaining their information through publicly available sources.
In a complaint to the Attorney General’s Office, a Bellevue business owner wrote: “I thought this was a text from the state government as a reminder for me to file my annual report. So I clicked the link and paid them $200 dollars to file my annual report. (We moved here last year, so I had no idea annual filing is only $60.) I received the text on Monday June 6th, I filed on their website the same night. On June 8th Wednesday, I received email from sos.wa.gov saying I have successfully filed my annual report. A person named Cameron Groom used their American Express card and paid for the $60 filing fee. This is when I realized I was scammed.”
A Snohomish business owner said in his complaint: “It looked very official and I bought their service. Within a few minutes, I had a bad feeling that I had just been defrauded and went back to cancel my order. There was no one to contact and no response to a complaint I filed through their website. … I feel suckered and can’t believe I fell for this scam.”
Ferguson’s lawsuit asserts that the scheme is an unfair or deceptive practice under the Washington Consumer Protection Act. It also violates the state’s Commercial Electronic Mail Act and the Uniform Business Organizations Code.
In addition to stopping the companies’ illegal conduct, Ferguson’s lawsuit seeks restitution for impacted businesses and nonprofits, plus annual interest, in addition to civil penalties. The Consumer Protection Act allows for penalties of up to $7,500 per violation.
Assistant Attorneys General Shidon Aflatooni and Gardner Reed, Investigator Scott Henderson, Paralegals Matt Hehemann and Khalid Ali, and Legal Assistants Michelle Paules and Kristina Winfield are handling the case for Washington.
What businesses are required to file, and where to find more information
Washington businesses and nonprofits are required to file an annual report each year by the last day of the month in which they originally formed. Prior to that date, the Washington Secretary of State notifies the business by mail or email. The Secretary of State does not send text solicitations.
The letter or email from the Secretary of State will detail the annual report filing deadline, renewal fee and the process for filing the report. Businesses can either file online, or complete paper annual reports and return them by mail.
Businesses and nonprofits are not required to submit annual meeting minutes to the state.
There is also an annual reports page on the Secretary of State’s website that includes a link to the Washington Corporations and Charities Filing System where businesses and nonprofits can file their annual reports online. There are also links to business and nonprofit annual report forms, including instructions, which can be downloaded, printed and submitted by mail.
Any business or nonprofit that believes it may be the target of a scam should file a complaint with the Attorney General’s Office.
Ferguson’s prior enforcement actions standing up for small business owners targeted in scams
In November 2022, as a result of a lawsuit filed by Ferguson, a King County Superior Court judge ordered CA Certificate Service and Labor Poster Compliance and their owners to pay more than $24.8 million for their unlawful conduct targeting small business owners. The companies sent hundreds of thousands of letters to Washington business owners that deceptively appeared to originate from the government. The letters demanded payments for posters or certificates that they deceptively implied were required to purchase. The certificate is not mandatory and available from the state for a fraction of the cost that CA Certificate Service demanded. The posters are available from state and federal agencies for free.
In March 2016, a King County Superior Court judge ordered civil penalties and restitution of $1.15 million in Ferguson’s lawsuit against Mandatory Poster Agency. The judgment included $793,540 in civil penalties and up to $362,625 in restitution for victims. The Michigan-based company duped thousands of Washington small businesses into paying for documents many Washingtonians thought were coming from a state agency. The judge found Mandatory Poster Agency violated the state Consumer Protection Act 79,354 times.
Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.
Brionna Aho, Communications Director, (360) 753-2727; Brionna.Aho@atg.wa.gov
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