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SALT LAKE CITY — Do you own a small business? You might want to double-check with the state that your name is still listed as the principal owner.
A Utah real estate title company says it is seeing an increase in fraudsters erasing the names of real business owners and putting fake names on business records. Once the scammers appear to have control of your business or property, they attempt to sell it to someone else.
Rachael Ortiz says someone tried to do this her business.
"We actually had this happen to us back in August where we looked, and myself and our four partners were no longer listed as the officers for our company and instead there were four new names," Ortiz said.
Ortiz, co-owner and general counsel of Meridian Title, explained that this seller impersonation fraud is about limited liability companies and other registered business entities.
Many small business owners, and some homeowners, put their property in an LLC, and put their own name as the owners, or authorized principal.
"It's really kind of any registered business entity. When you set that up right, you're going to give the state (the names of) who the authorized principals are," Ortiz said.
Fraudsters are attempting to change who the state has listed as the owner.
"In Utah it's relatively very easy to change out the principals of an LLC. I could go online today and put myself as the manager or president of hundreds of entities that are registered in Utah. And then I could potentially go use that information to set up bank accounts. If those entities owned property, I could pose as the person with authority to sell off that property," Ortiz said.
The COVID-19 pandemic, she says, changed the way business is done across the nation. This gave fraudsters an opportunity to claim they are the ones with the authority to sell off a property.
"During the pandemic, we were doing a lot more closings and sales with people not coming into the title company or people not interacting directly with their realtor," Ortiz said. "We were all communicating more and more through text, through email."
Before the pandemic, Ortiz said, her business had not been frequently seeing attempts of this type of fraud. Now, it's daily, according to Ortiz.
"In talking to some others in the industry, some other title agencies, and some of our underwriters, they had mentioned that it had happened to them before. They've had this happen and have had to update their entities time and time again," Ortiz said.
What can consumers and business owners do?
Timothy Johnston of the Better Business Bureau of Utah suggests that business owners contact the Utah Division of Corporations and Commercial Code if they notice a discrepancy.
Melanie Hall, a spokeswoman for the agency, says the division's role is not investigative or regulatory.
Hall explained the role of the division regarding changes to a business filing, such as altering the principal of an LLC.
"What we do at the Division of Corporations is ministerial, and so they have to accept by statute any business filing for a business license," Hall told KSL.com.
"What tends to happen a lot is it isn't that they are necessarily fraudulent changes to business entities or principals of a company. There are often disputes, or a company gets split up by founders, and it's a civil dispute that we can't make a decision about without a court weighing in," Hall said.
Ortiz said that the state agency does provide resources to protect your business against this type of fraud.
"There are really two things when we're talking about these entities and this land grab, there's a couple things that consumers can do themselves. One is just consumer awareness that it's happening and one thing the state is offering now for business entities is called Business Fraud Alert," Ortiz said.
After registering for the program, Utah's Business Fraud Alert will send you an email anytime someone tries to update your business records.
"We've actually tested it out. It seems to happen in real-time," Ortiz said.
There is a similar program for Salt Lake County homeowners called Property Watch.
"It's a free service and what you do is you give the county your address or your tax parcel number and email address. And it will tell you anytime that someone records something on your property," Ortiz said.
"I know that, you know, we're really trying to push all the counties to be able to have this process," Ortiz added.
