Colorado's business growth marred by fraud
Add Axios as your preferred source to
see more of our stories on Google.
Colorado is a hot spot for new businesses, but behind the numbers is a troubling trend.
State of play: Fraudulent business filings are increasing at a "pretty dramatic" pace in Colorado and across the nation since the pandemic, Secretary of State Jena Griswold recently told state lawmakers.
- "We have received far more complaints than anticipated," she said. "Which shows on one hand we were either underestimating the amount of fraudulent activity or the fraudulent activity really upticked."
Why it matters: The nefarious activity undercuts Colorado's status as a national leader in new business applications.
By the numbers: The Secretary of State's Office has received more than 3,100 complaints about fraudulent business registrations, the latest numbers through Wednesday show.
- Of the 1,703 cases processed, 1,300 were marked as bogus. The fraudulent ones are sent to the Attorney General's Office for potential criminal prosecution.
Between the lines: In some cases, the filings duplicate existing legitimate businesses in an attempt to use them as covers for fraudulent activity.
The big picture: In 2023, Colorado saw the most new businesses ever created in the state — 138,867, according to the latest IRS data.
- The per capita rate of 23.6 ranked fifth in the nation.
Caveat: One factor that drove new filings was the yearlong decrease in the filing fee from to $1, a move designed to help business owners post-pandemic. The current fee is $50.
- Despite the uptick in fraud, Griswold said, the lower filing fee from July 2022 through June 2023 was net-positive for the state.
What's next: A new law signed earlier this year put $464,000 toward a new system that requires enhanced verification measures to ensure that business applications are legitimate.
- Starting next July, people filing new registrations will be required to show a valid driver's license.