Third enforcement action against 3 Michigan brothers who continually target small businesses around the country
SEATTLE — If you own a Washington small business, there’s a good chance you have been targeted by a series of fraudulent schemes orchestrated by three brothers in Michigan. The details of their schemes vary, but they all involve deceptive solicitations giving the false impression that they are mandatory bills from a government agency.
In 2008, the Attorney General’s Office investigated consumer protection violations by Labor Law Poster Service, formerly known as Mandatory Poster Agency, a company run by brothers Joseph Fata, Thomas Fata and Steven Fata, and later by Joseph’s son, Justin Fata. Mandatory Poster Agency entered into a legally enforceable agreement that it would provide full refunds to Washington businesses and stop the unlawful conduct to avoid a penalty.
Mandatory Poster Agency did not stop, and in 2014, the Attorney General’s Office filed a consumer protection lawsuit and won. In March 2016, a King County Superior Court judge ruled that Mandatory Poster Agency violated the Consumer Protection Act 79,354 times and ordered civil penalties and restitution of $1.15 million. The judgment included $793,540 in civil penalties and up to $362,625 in restitution for businesses harmed by the deceptive scheme. The court also ordered the Fata brothers to stop their illegal conduct. In all, Mandatory Poster Agency and the Fata brothers paid more than $1.2 million as a result of that judgment.
Even after paying, the Fata brothers did not stop their illegal activity.
Today Attorney General Bob Ferguson filed a new consumer protection lawsuit against Labor Law Poster Service, and the Fatas, for sending hundreds of thousands of deceptive solicitations targeting small businesses.
The lawsuit, filed in King County Superior Court, accuses Labor Law Poster Service of violating the state Consumer Protection Act more than 300,000 times over the course of at least seven years. It alleges that the company and its owners violated both the prior permanent injunction and the 2008 resolution with the Attorney General’s Office that prohibited the company from sending deceptive letters.
Ferguson’s lawsuit is part of the Small Business Protection Initiative, which has won tens of millions of dollars for Washington businesses that have been targeted by scams.
The types of businesses across Washington affected by Labor Law Poster Service’s scheme include a small law firm, a fitness franchise, a daycare center, a veterinarian, a church, and a company that transports people who use wheelchairs to non-emergency medical appointments.
“These repeat offenders keep recycling deceptive tactics they know are unlawful,” Ferguson said. “We will make them return every penny, plus interest, to small business owners they harmed. We’ll also seek a significant penalty to make sure they stop their illegal conduct.”
Ferguson’s latest lawsuit asserts that Labor Law Poster Service mailed at least 325,750 deceptive letters to small businesses between 2016 and 2022, including 60,000 to 70,000 new solicitations each year. The lawsuit alleges the company made at least 1,650 sales to Washington businesses since 2016, totaling at least $141,228 in sales.
Ferguson’s lawsuit seeks:
- Full restitution for Washingtonians harmed by this deceptive conduct, plus interest. This includes the $141,228 in sales, as well as any other payments the Attorney General’s Office uncovers from Washington businesses as a result of the deceptive solicitations.
- Civil penalties for every deceptive letter sent to Washington businesses to hold these repeat violators accountable and deter future violations. The law allows the Attorney General’s Office to seek a significant penalty of up to $7,500 for every one of the 325,750 deceptive letters.
- Civil penalties of up to $125,000 for each of Labor Law Poster Service’s violations of the injunctive terms of its 2008 agreement with the Attorney General’s Office and the King County Superior Court’s 2016 permanent injunction.
Labor Law Poster Service sent letters around the United States. Attorney General Ferguson will be communicating with other state attorneys general about this case.
Background on workplace requirements and posters scheme
Businesses with employees are legally required to display certain workplace posters about a variety of workers’ rights and entitlements, such as workplace safety requirements or the right to access disability leave.
Employers can download digital copies of these posters for free from many regulators and state agencies, such as the Washington Department of Labor and Industries, Washington Employment Security Department and the U.S. Department of Labor. Workplace posters are not required for businesses with no employees.
Labor Law Poster Service intentionally misrepresents these requirements for profit. They send deceptive letters that look like bills or invoices from a government agency. They mail the letters in envelopes with threatening language about legal consequences for not immediately purchasing the advertised product — a “Complete State & Federal Posting Requirement Set” — at a cost of $79.50 or more. These solicitations target small business owners, often newly registered small businesses, who may lack time and resources to thoroughly vet the legitimacy of the letters.
Together, these deceptive tactics leave business owners with the impression that buying and displaying Labor Law Poster Service’s product is required by law and they ultimately pay the fee to avoid any risk of legal ramifications. One business owner targeted by the scheme, who processes bills and invoices for a fitness franchise, told the Attorney General’s staff: “We were only trying to comply with the law.”
The latest lawsuit also asserts Labor Law Poster Service continues soliciting renewal payments from businesses they previously duped into buying the posters. Ferguson’s lawsuit asserts that each version of deceptive solicitation — whether for new or repeat purchases — counts as a violation under the Consumer Protection Act.
Assistant Attorneys General Zorba Leslie and Kelsey Burazin, Investigator Scott Henderson, Paralegal Mary Barber and Legal Assistant Ashley Totten are handling the case for Washington.
Details on investigation and prior violations
The Attorney General’s Office opened an investigation after receiving several new complaints from businesses who had purchased posters from Labor Law Poster Service, formerly known as Mandatory Poster Agency. In addition to violating the CPA, the conduct alleged in the complaints violates a previous resolution with and prior permanent injunction against Mandatory Poster Agency.
The company previously sent envelopes marked “Important: Annual Minutes Requirement Statement” to roughly 80,000 Washington businesses between 2012 and 2013. Ferguson asserted that more than 2,900 small businesses paid $125 each to prepare documents that looked like they came from the government. The judge found Mandatory Poster Agency’s mailings violated the Consumer Protection Act 79,354 times. The company paid penalties amounting to $10 per violation, plus consumer restitution. It also paid the Attorney General’s Office $377,164 for attorneys’ fees.
Under its new name, Labor Law Poster Service violated both the 2016 court order and the earlier resolution by engaging in the same deceptive practices.
Other states have filed lawsuits against Labor Law Poster Service for engaging in similar deceptive conduct across the country. A lawsuit brought by the Tennessee attorney general is pending, and in 2017 Arizona won a $626,000 judgment against the company when it operated as Mandatory Poster Agency. In 2016, Labor Law Poster Service agreed to pay nearly $400,000 in penalties after violating a cease and desist order with the Delaware attorney general. In 2013, the Fata brothers, then operating as Mandatory Poster Agency, entered into a consent judgment with the State of Wisconsin after sending more than 72,000 deceptive mailers that required them to pay $340,000 in restitution and civil forfeitures.
Combined, these recycled deceptive tactics can amount to millions of dollars in profit for these repeat offenders.
Prior enforcement on scams targeting businesses
Ferguson filed lawsuits in March 2022 against Florida-based CA Certificate Service and Labor Poster Compliance and their owners for sending hundreds of thousands of deceptive letters to Washington business owners. The solicitations appeared to originate from the government and demanded payments for posters or certificates that the company deceptively advertised as mandatory.
In November 2022, a judge ruled that the two companies committed 232,091 separate violations of the Consumer Protection Act. The court ordered the companies to pay more than $24.8 million in penalties and restitution. The judge also permanently blocked the defendants from mailing the deceptive letters into Washington.
In February 2016, a Thurston County judge ordered LA Investors LLC, a California-based company that duped new Washington property owners into buying overpriced deeds, to pay more than $3.6 million for its deceptive practices. The court found the company violated the state Consumer Protection Act at least 256,998 times by sending deceptive, official-looking notices implying that consumers needed to buy a dramatically overpriced $89 copy of their deed. Deeds typically cost only a few dollars from a local county office, and many property owners can obtain a copy of their deed for free online.
If you suspect you have been the target of similar scams, please contact the Attorney General’s Office. You can file a complaint online at atg.wa.gov/file-complaint or call the office toll-free at 1-800-551-4636.