Is the CA Certificate Status company a scam?

Lately, my clients have been receiving a solicitation from a company calling itself CA Certificate Status, which offers to obtain from the California Secretary of State a certificate of status for a company. The solicitation preaches the possible benefits of a certificate of status and offers to obtain one for a fee of $87.25.

For those who might think that the form looks like a government form (in part because of a “Please Respond By” date in a very large font—perhaps the largest on the page), the form says in a very small font—perhaps the smallest on the page: “This is not a government agency.”

The question has arisen whether this is a scam.

I don’t know the company, and I have no basis to call this a scam. I assume the company will in fact obtain and deliver a certificate of status.

But the better question is whether one needs this service. In general, the answer is no.

First, for a $5 fee, anyone can obtain a certificate of status for a company by going to the California Secretary of State’s website and using the online BizFile service.

Second, a certificate of status is useful for only a short period of time because it speaks of the good standing of the company as of the date it’s issued. Anyone asking for a certificate of status will want one that is reasonably current, say, only a week or two old.

The only reason to order a certificate of status is if a lender or other third party requires one for a transaction or for some other reason. And in my practice of more than 40 years in California, I’ve had to order a certificate of status for a client only on a handful of occasions. Because the Secretary of State shows the status of companies online via the BizFile service, there is typically little need for a certificate of status.

certificate of status By the time a need arises for one, it will undoubtedly be out of date and useless.

 

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This entry was posted in Corporate Law, Limited Liability Comanies (LLC's), Limited liability companies (LLC), Qualifying to Do Business and tagged , . Bookmark the permalink.

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