Lax State Law Makes Stealing Identities Easy in Arizona

Many Arizonans dream of starting their own business. If you're ready to put that dream into action to escape the corporate thumb or begin working toward something that's uniquely yours, setting up your own gig can be an attractive proposition.

Setting Up an LLC in Arizona

The Good News: Arizona makes it really easy to start your business. You can set up an LLC (Limited Liability Company) without leaving the comfort of your couch. The Arizona Corporation Commission will let you handle the set-up and filing online. Pay the small $50-$85 fee, and you're on your way.

More Good News: When you set up your LLC, there's no ID check, which is great if you're ready to start your business and looking to make things easy.

The Bad News: There's no ID check when you set up an LLC. It's also a great loophole for scammers.

Scammers: How They (Mis)Use Arizona's Lax LLC Setup Structure to Defraud Seniors

In Arizona, setting up an LLC is so simple that scammers are taking advantage of it by setting up LLCs using the names of victims they acquire through identity theft.

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Many of the victims of this scam are senior citizens. Since seniors are often less tech-savvy and much less likely to keep tabs on their accounts, they may not notice something is wrong until things are very, very bad.

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How the LLC Scam Works

• Scammers acquire someone's personal banking information.
• Scammers then use the victim's name and banking information to set up an LLC in the victim's name.
• Victims often don't notice until it's too late

Now that the business looks legitimate, scammers transfer funds from the victim's personal bank account into a new "business" account they set up and control.

Since the victim's name and the business's name match, this doesn't raise any red flags for the banks. Victims usually don't notice the theft until it's too late.

Banks don't often scrutinize businesses and LLCs moving funds around. It's a widespread practice, and as long as the business has been set up through legal means, banks take for granted everything is above board.

However, the lax filing process makes it easy for bad actors to circumvent the implied verification process. See the holes in this loop?

Have You Been the Victim of a Data Breach in Arizona? Probably

Could you or someone you care about become a victim of this scam? The short answer is yes.

Think About It: 

• How many times have businesses announced a data breach?
• How many notices have you gotten in the mail stating your personal information "may have been compromised," and now you're getting a legal notice of the shortfall?

These "legal notices" never give any apology, instruction, or information on the nature of the compromise or what you can do to get ahead of it. And they don't tell you who might have your sensitive data. It may be safe to say that nearly everyone in the US has been compromised at least once.

READ: New Phone Scam in Arizona Uses Deep Fake Technology

Closing the LLC Loophole in Arizona

For now, if you have elderly parents or friends, consider helping them become more comfortable using online tools to monitor their accounts so they can get in front of potential problems.

It could be worth reaching out to our local Arizona representatives to start the conversation around tightening the laws around setting up an LLC.

In the short run, it will likely make setting up a business in Arizona a little more cumbersome, but in the end, it'll keep everyone a little safer in cyberland.