How fake businesses can become a real problem for you

PHOENIX, Az. (InvestigateTV) — Imagine your name and home address are used to start a business, but you have nothing to do with it.

There are reports of this happening in several states of fraudulent companies registering with random addresses. Experts say it can cause trouble for unsuspecting property owners.

Morgan Johnson doesn’t own a furniture store or run a toy wholesaler, but there’s paperwork that sure makes it look like she does. Three times in the past year, someone has created limited liability companies in her name at her address.

Johnson discovered the fraud after receiving mail about pending credit accounts she never opened.

“I freaked out a little bit about it because it felt so intrusive,” she told On Your Side.

Fraudsters create fake LLCs with the goal of cashing in, often passing bad checks or opening a line of credit they’ll never repay.

“The bottom line is it’s not for a good reason,” said Tanya Gibson, the director of the Corporations Division at the Arizona Corporation Commission. “It’s a huge problem.”

According to data from the agency, the Corporations Division received 208 complaints about fake LLCs in September 2025. After a new system launched in early 2026, complaints dipped, but rose again to 180 in May 2026.

Why it’s easy to create a fake LLC

Currently, anyone can create an LLC online using only a name and address. No identification is required.

“We have no way to verify if that person has the ability to use an address,” said Gibson.

Gibson said she wants the law changed to give the division authority to validate information and deny filings if fraud is suspected.

In the meantime, changes are coming to make it tougher to file for fake LLCs. “[By July 1], we’re going to have our online ID verification, which will require a photo ID, front and back, and a selfie,” Gibson explained. “Then the software runs the information against multiple databases. You either come back verified or not. If you come back verified, you get a stamp on your account, and you’re free to file. If you are not verified for whatever reason, you will get a message saying that you need to come into the office to file.”

Gibson acknowledged the state cannot prevent fraud completely.

“We’re trying to throw as many hurdles in place as we can,” she said.

Once the state receives a complaint about a fake LLC, it can take months to get it dissolved. In the meantime, the division marks the status as pending inactive and not in good standing and flags it as undeliverable to alert banks and credit agencies.

Johnson said flagging fake LLCs isn’t enough.

“We need to do a lot more,” she said.

How to check for fraud

Fake LLCs could go unnoticed if victims don’t receive mail about them. Gibson said the agency often sees clusters of addresses, suggesting fraudsters are pulling lists of people and addresses at random.

Residents should check their own address for unauthorized LLCs and file a complaint with your secretary of state’s office.