Business Filing Address And Name Fraud
Under the law, a business entity submits filing documents that concern the creation, organization, and operations of an entity to the secretary of state through an online filing system. By submitting a document, an individual affirms under penalty of perjury that the individual is authorized to file the document, the facts in the document are true, and the document otherwise complies with the secretary of state's filing requirements. The secretary of state saves the document in an online database as a ministerial act and does not independently verify whether the document is accurate.
The act creates a complaint process for a person whose business identity or personal identifying information has been used in the filing of these documents with the secretary of state without authority or for fraudulent activity. If a complaint is submitted with the secretary of state, the secretary must forward the complaint to the attorney general for further investigation. The attorney general may investigate the complaint and refer the complaint to an administrative law judge.
If an administrative law judge determines that an entity has been created fraudulently or without authorization, the secretary of state is required to:
- Mark the business record with a notice that the entity is fraudulent or unauthorized;
- Redact each address that was used without authorization from the entity's filing and from any other relevant filings; and
- Disable additional filing functionality on the entity's records.
If an administrative law judge determines that an unauthorized filing was made for a legitimate entity, the secretary of state is required to:
- Mark each unauthorized filing for the entity to notify the public that the filing is unauthorized;
- Redact from the entity's filing and from the relevant filings each address and name that was used without authorization; and
- Mark the business record on the entity's filing to notify the public that the entity has been the victim of fraudulent or unauthorized acts.
If a person alleged to have committed fraud or unauthorized acts fails to respond to the complaint, the allegations are deemed conceded, and the secretary of state is directed to take the appropriate steps listed above in the same manner as if the finding had been made by an administrative law judge.
The act creates a working group to study measures to counteract and prevent fraudulent filings in the online business filing system. The working group has 11 persons who represent the affected state agencies, businesses, and the Colorado bar association. The working group is directed to submit a report to the general assembly by January 31, 2023, containing potential legislative provisions to counteract and prevent fraudulent filings, as well as the costs and benefits associated with each potential legislative provision. The report may include specific recommendations to the general assembly.
Fraudulent filings are made an unfair or deceptive trade practice under the "Colorado Consumer Protection Act" and as such are subject to enforcement by the attorney general's office.
(Note: This summary applies to this bill as enacted.)