Business License Scams: A Barrier for Reentrants

by Lisa Lake

It can be hard for a person starting over in life to earn a living — especially if he or she is reentering society from prison. That’s one reason why many reentrants decide to use the trade skills they’ve learned to go into business for themselves.

But local consumer protection agencies have told the FTC about scammers who lie about being able to help people get professional or business licenses to start barbershops, hair salons, auto repair shops and other businesses. These con artists contact people in different ways and some say they issue licenses themselves. Many reentrants don’t believe they will ever get a business license through the usual channels. That makes them vulnerable to scams.

Some reentrants may find themselves frustrated by occupational licensing regulations that don’t make sense. Maybe their trade is licensed in some states, but not others. That’s confusing.

If you’re looking to get a professional or business license, here are three things you should do before you pay anyone money:

  1. Check with your state or local government first to learn how to get a professional or business license. The requirements and fees depend on the type of business you’re starting, where it will be, what services you will offer, and government rules. Also, the Council of State Governments’ Collateral Consequences database provides detailed information on licensing restrictions based on your record and the type of license you’re seeking.
  2. If a company says it can issue you a professional or business license, check it out first. Typically, government agencies issue professional and business licenses. Contact the agency that oversees licensing for your trade to see if the company is legitimate. You also can search online using the company’s name and the term “scam.”
  3. Visit the U.S. Small Business Administration’s website for information on licensing and starting a small business.

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