The Arizona Corporation Commission is taking initial steps to prevent business identity theft and fraud committed against Arizona business owners.
On December 17, 2024, the Commission voted to authorize the Corporations Division to pursue, formulate, and ultimately implement several new policy changes and possibly request legislative changes that will combat fraud and deter fraudulent filings, as well as make the business customer experience more efficient.
“Small businesses are not only one of the most vital parts of our economy, but among the most important assets for thousands of hard-working Arizonans,” said Chair Kevin Thompson. “This Commission will take every opportunity to be proactive and protect Arizonans from the threats of business fraud and business-related identify theft. I applaud our Corporations Division for coming forward with real solutions and for the Commission acting to protect the public.”
Currently, as is the case with most Secretaries of State/business filing agencies across the country, the Corporations Division is ministerial with no regulatory or enforcement authority. With reports of business fraud and business identity theft on the rise, the Commission is proactively moving forward to protect the public in the face of outdated statutes and administrative code that is not adequate to address the modern tactics and techniques used to commit fraud.
The Corporations Division presented internal policy changes that will serve as hurdles to bad actors who attempt to commit fraud against Arizona businesses and their owners. One immediate policy change will require filers to present two forms of identification when filing in person, and similar identity verification protocols will soon be applied to online filings.
Another policy change involves developing and implementing a non-cumbersome way for LLCs to attest that their business continues to operate its business. Dormant LLCs (those LLCs that have not filed any documents on their business in years) are an easy target for fraud by bad actors who add themselves onto the business then use that business’ reputation and credit rating to commit fraud.
Another policy change will require businesses to designate and authorize who is able to file a document or have signing authority on behalf of a business. Additionally, the Corporations Division proposed allowing businesses to develop and use their own custom forms to file Annual Reports and Certificates of Disclosure rather than having to use the Commission’s standard forms. Businesses will still be required to include the required information needed by the Commission, but will be allowed to incorporate more custom details and information that will make it more difficult for a bad actor to impersonate a business.
The Corporations Division also presented a potential proposed legislative change that would require Arizona businesses to register with the Commission prior to being granted authority to conduct business. Currently, an Arizona business is not expressly required to register with the Commission prior to conducting business in the state, while foreign businesses must register with the Commission first.
The Commission’s vote and approval was specifically for the Corporations Division to begin the process of detailing the requirements for the proposed changes and outlining the implementation of each action. The Commission will also work to assess the viability of and pursue potential necessary legislative changes.
The above article was written by Nicole Garcia and provided by the Arizona Corporations Commission on January 28th, 2025.
