A New Government Scam?

Government letterheads are not designed to be pretty. They do not have to be. When we get a letter from our Govt we are tempted to intense anxiety before retiring to change our briefs. Government is not known for frivolous missives.

This means that when you receive one from the Dept of Justice telling you boldly about the imminent "Removal of your company details" you take instant action.

That logo looks the same as the last Govt letter you received, and that was not good news either. The style is best described as unjovial.

The Letterhead looks awfully official

You also know that no South African in his right mind will try to forge a Govt letterhead. The thought of a few years in Pollsmoor tends to put one off.

This does not stop a German company from sending out letters that look just like Dept of Justice communiques. Thousands of them. The threat of a few years in the hotels that pass for German prisons must sound like a holiday to hard-working German scamps.

Bottom line: do not respond to a letter from anyone, even the Department of Justice, about the "Removal of your company details". It is a scam, but not by the SA Government.

Actually, the only crowd in SA that can remove your details from anything is the team at CIPC. They do not want you get into a flap while they deregister your firm so they do not warn you. I am sure that their intentions are sincere.

What thousands of South Africans are facing is a German scam which looks very much like a government directive. It has been going on since 2009 in about 20 countries. (I list below the ones I have found.) Yet there seems to have been almost no action taken against the firm.

Each person who is burned by the people hiding behind TVV Tele Verzeichnis Verlag GmbH assumes that they alone are stupid to have been had. Not so. These guys write letters that look just like the real thing you might get from the UK Department of Trade, or the Norwegian Government or the SA Department of Justice. The letters are marketing genius, albeit on the wrong side of what the rest of us call ethical. But maybe not.

You might think that each target country might instruct their local German consulates to make known to their hosts their slight concern. It seems not.

It turns out that this letter is viewd as a normal request to do business even if it is slightly racy, what with a SA govt logo and all.

This Tvv Tele Verzeichnis Verlag GmbH scam.

The letter you receive actually refers to their private www.web-register-za.com website, not any official SA govt register. This site is hosted by Hetzner in Germany and has as much to do with South Africa as the Platypus.

You receive a letter where the second paragraph clearly states that any changes are free. That's what You will not be charged for this! often means. That exclamation point makes the point even more emphatic.

The TVV Tele Verzeichnis Verlag GmbH scam letter misleading paragraph

(Read that again very, very carefully and you will notice that they refer to you logging into their site to do this yourself. Anything else costs a little more.)

The second page offers you a simpler way to make any changes. Of course you do so and then fax the document. You could also post it using the "prepaid" envelope. Since the SA post office is as concerned about delivering mail as the SA government is about protecting you from fraudsters using their logo, faxing seems more prudent.

The TVV Tele Verzeichnis Verlag GmbH misleading page

(As I researched the layout of that page I could not help but admire how it has been tweaked over the years to be almost irresistible.)

About two weeks later you will get an invoice from TVV Tele Verzeichnis Verlag GmbH for R9372 along with a sheet asking for your credit card details.

So you read the original letter again to try and understand what has happened. (If you have not yet filed the original in your bin.)

It turns out, as you dig deeper, that you have signed a contract with TVV Tele Verzeichnis Verlag GmbH to advertise your business on their German website for R9372/year for three years. It renews yearly after that until you cancel by registered letter.

You can also cancel by registered letter to Germany within the first two weeks. That could be why the invoice takes a few days more than that to arrive.

As these began to cross my desk last week I spoke to two lawyers about how legal such a contract might be. Both agreed that this was a valid contract. You might have some defence based on the government logo, and the misleading wording, but their opinion was that you should have read it carefully first. Of course they are right.

But that letter is pure marketing genius. If trademarks inspire trust (and a govt logo is just such a thing) then you cannot do much better than a government logo when selling something. Especially when that letter offers it offers you a free DIY fix. Irresistible.

1300 South Africans have already thought so. And 3400 Brits, and 897 Canadians, and …

Add all of these up and you see a whole lot of money being syphoned. 10,000 signers at R9372 each is almost R100 million, and that is just for the first year. And this is legal?

Oh yes. Because they do exactly what the document says they will. They do change your details. And they do give you a featured page. But on a German site that no possible prospect will ever look at with a search process that harkens back to the Middle Ages.

I am tempted to suggest this as a superb business opportunity but I fear I might wipe out whatever karmic balance I have accrued.

What I find most curious is how subtly this is done. I phoned a few of the firms that I could see had involuntarily "contracted" this German firm. Each person I spoke to was waging battle against this firm alone, as if they were the only person who might have done this.

Once you have signed the enthusiasm with which the German firm pursues your payment is matched only by SARS.

www.web-register-za.com and siblings…

We like to think that we Saffers are special, but the team at TVV Tele Verzeichnis Verlag GmbH has been crafting this for a long time in lots of countries. Here are the ones I dug out as I researched this article:

So, what to do?

It turns out that a few folk do actually pay, and this might make it profitable enough for the German firm to desist from chasing. As far as I can see they do not seem to have taken true legal action against anyone who has ignored them. Of course, maybe our very own CIPC team will deregister your firm before it gets to court.

File the paperwork, just in case.

And then sit it out. If you're lucky the Post Office will revert to form and stop delivering the letters. Otherwise, email me here and tell me your story.

Somebody told me the other day, "If you want to mess with South Africans you need to be wearing your big boy pants."

Hidden Business Risks…

Some years ago my brother was invited to a meeting with the bank manager of one of his clients. This bank manager had invited their mutual client to a round table discussion so that a sister insurance firm could pitch for his business.

My brother had looked after this wealthy client for some years. They were the same age and shared the same interests and had grown to be close friends. Both had (and may still have) fine senses of humour.

The bank’s insurance guy led the discussion, talking about how wise it was for folk to spread their risk, not to keep all their golden eggs in a single vault, and suggesting that it was time to let the big boys help manage all this money.

The mutual client sat through the entire spiel.

At the end he summed up his understanding. “You want me to split my investment work between Mr Carruthers and ‘your’ team because I should diversify my risks?” he asked the bank manager.

The bank manager nodded. Banks get commission for this kind of thing, so there may have been a vested interest.

“OK”, the client said, “that sounds logical. How much do I have in my accounts with you right now?”

“About R35 million,” the bank manager said.

The client turned to my brother. “He’s telling me that keeping all my money in one place is a bad idea. Which bank do you suggest I transfer R25 million into?” he asked.

There was a long silence.

The bank manager then turned to his corporate colleague and said, “I think we should give our client some time to think before taking any hasty action.”

My brother kept all the investment work.

I thought about this a few days ago as I saw an article from a bank in an well known entrepreneurial website about how to finance (and how not to finance) buying a franchise.

  • Option 1 (they recommended): Your business should borrow from a bank.You will have to offer security, like your home, and sureties, just in case your business fails.

  • Option 2 (they disparaged): Extending your bond yourself because you might lose your home if your business fails.

Hint: These are the same, except that the interest rate the bank will charge in Option 1 is about twice the interest rate on your bond in Option 2. And, of course, the Option 1 loan can be called back at any time, unlike the bond in Option 2.

This is the kind of advice aspirant business owners get. It cost me 10 years to fix my own fallout afterwards. It is one of the reasons I want to reach 1 million startups before they find out that bankers are not small business advisors…

New Start-Up Training. Free.

Start Up Business Training FreeSmall business failure rates suck. In any other system a 50% failure rate in the first year would be seen as a reason to recall each car that came out of that factory. Or to fire the teachers. Or to ban the pastime.

I am vexed because we do not see beyond the numbers. This cascade leads to divorces and bankruptcy. Worse, we punish these fallen heroes even though starting up was their only option when they could find no work.

These failure rates are taken for granted by the powers that be. It has been so for the thirty years I have been in this arena. My own closure in 1992 is how I came to know each person I now work with.

Today we have so much more than we ever had. Instant access to any info. Tech that lets us reach across the globe.We can start up almost for free. We should not be failing nearly as often.

I intend to stop it. I think that I can get that failure rate down to 10% with common sense training and peer support. For free. Through the web via mobiles, tablets, and PCs. Before they start. We no longer have excuses.

I don’t know if I am the right person but I will run with it until we get enough traction. I have another million business minutes left and this seems a worthwhile place to invest them.

My target: Train 1,000,000 people to build startups that sail past that first year threshold. Get that closure rate down to 10%, with a parachute that lets people down gently without losing their marriage, their home, their car,…

As we remove risks from starting up we also reduce the risk of it closing early. We make it more robust.

I have grown old waiting for government to help. Their startup advice is akin to me hurling my infant daughter into the deep end with a book on how to swim.

I will devote most of my remaining 1 million business minutes (about 10 years) to nurturing business seedlings.

Tiny problem. I don’t know 1 million people. But I know you. And you know a few people… I can see you get the point so I won’t belabour it. I am asking you for your help, please.

You know some people who want to start up. Maybe they’re fresh out of school, or fresh out of a job, or fresh into motherhood, or have just closed a business. These people need start-up street-smarts fast.

Please do me the courtesy of checking out the free course for start-ups at the new Academy of Small Business. Then ask people to join the free course. Maybe forward this email to them?

I won’t let you down.