Small Businesses Tricked into Paying Unnecessary "Government Fees"

COOPERSTOWN, NY (05/07/2012)(readMedia)-- You receive an official looking envelope from the "United States Trademark Registration Office". You open it. Inside is a document with barcodes, your address, and detailed information about your recent trademark filing. It announces that a fee of $375 is NOW DUE and provides a payment stub for you to return. The text of the document starts with "U.S. Customs & Border Protection (CBP), a bureau of the Department of Homeland Security maintains a trademark recordation system...." and is followed with acronyms, citations to Federal statutes, and other intimidating jargon. If you are like many small business owners, your first instinct is to pay it. You certainly wouldn't want to run afoul of the CBP or USTRO. So, you write the check.

At some point, you will learn that you have actually answered an unrequested solicitation for an entirely optional service from a private company. In short, you have been scammed out of $375 for a service you didn't want or need. And you have probably been added to a list of "buyers" to target with future solicitations.

"Our clients receive 'solicitations' like this every month," says Chuck Knull, co-founder and trademark attorney with Knull Group. "And they are getting worse."

The formula is pretty simple and it has been in operation for many years. The solicitation described above is just one example. The process starts with the public trademark database. All trademark applications are published and available online, where USTRO can harvest business addresses and trademark information to dress up their solicitation. They know that small business owners are buried in government regulations and forms that they don't really have the time or energy to fully investigate or understand. That confusion makes it easier to pay a "government fee" then really figure out what it is for.

Take the confusion and reinforce it with fear. Their company name, United States Trademark Registration Office, could easily be mistaken for part of the Federal bureaucracy. Their $375 price mimics fees published by the actual United States Patent & Trademark Office. They refer to multiple real Federal agencies and statutes. They include all caps warnings that your registration will be canceled if you do not make the specified filings. The "Reply By: NOW DUE" is really the finishing touch.

To be fair, they do include language stating that it isn't actually a bill and explaining what USTRO really is. It is buried in the text. The context de-emphasizes that message and really serves to make the whole thing that much more confusing and intimidating.

"Our clients are successful executives and business owners and they still forward these things to us because they are unsure what they mean," says Knull. "They are the lucky ones. They know we are happy to review these things free of charge because it helps us alert other clients. It is the people who don't have a trusted business attorney that are the real targets for these companies."

Knull Group uses its Eat.Drink.Law blog to publish alerts about deceptive solicitations its clients receive.

These kinds of deceptive solicitations are not limited to Trademark Owners. Anywhere there is a public database and a warren of regulations, the same techniques can be used. Solicitations related to "losing your Chinese domain name" were very popular for a while. Business registries in Europe (based on public filings for corporations and limited liability companies) and copyright listing services have also used sales approaches in a similar vein. Some of these may offer legitimate services, but their sales methods are questionable at best.

What should you do? If careful reading still leaves you in doubt, consult your attorney. Most attorneys can quickly detect whether it is a legitimate invoice.

Knull Group is an intellectual property and business law firm that advises food and beverage businesses on protecting their know-how, brand, and relationships. With offices in Cooperstown, New York City, and the Finger Lakes, it serves the growing number of breweries, wineries, restaurants, and specialty food businesses throughout New York State and beyond. This article is not legal advice. Subscribe to the Eat.Drink.Law blog at www.eatdrinklaw.com.