Federal Trade Commission Warns of Scams Directed at Small Businesses

The Federal Trade Commission (“FTC”) and the Florida Attorney General have recently filed a case in federal court seeking an injunction against one of the perpetrators of an increasingly common scam. The “o-fishy-al” invoice (the FTC’s pun, not ours), a solicitation designed to resemble an official government notice, attempts to convince small business owners that they are required to make a purchase or pay a fee in order to comply with laws or regulations.

Starwood Consulting sent mailers titled “LABOR LAW COMPLIANCE REQUEST FORM” to Florida businesses. The mailers instruct businesses that they are required by federal law to display a current compliant labor law poster in the workplace, and go on to warn businesses of potential fines of $17,000 per instance. Businesses are asked to respond to Starwood Consulting by a certain date, and to use an enclosed envelope to return a “document processing fee” to obtain a labor law poster.

Although businesses are required to display various posters, the cited sections of the U.S. Code in the “o-fishy-al” notices are unrelated to labor posters. Further, all posters required by federal law can be obtained from the Department of Labor for free. The U.S. DOL Poster Advisor helps businesses determine which posters they must display, and provides downloadable PDF versions.

The FTC and Florida AG claim that the overall impression of these communications is to falsely suggest to businesses that the sender is affiliated with a government agency, and that businesses are required to purchase the labor regulation posters from the sender. The suit alleges that Starwood Consulting’s actions violate the Federal Trade Commission Act and the Florida Unfair and Deceptive Trade Practices Act, and the government is seeking the disgorgement of Starwood’s profits and civil penalties in addition to a permanent injunction to prevent future violations of those laws.

More information about these “o-fishy-al” invoice scams can be found at the Federal Trade Commission’s Business Blog. To avoid falling prey to these scams, make sure that you verify that all bills and invoices are for valid expenses before paying. Don’t hesitate to seek advice from experienced contacts in your community if you are unsure as to the legitimacy of certain correspondence.

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