When Kim Talbot first opened his milling shop in southern Maine, he hoped to win a coveted contract with the federal government to manufacture machine parts out of steel and aluminum. With no idea where to start, he did what any inexperienced small business owner might do: he googled.
The main search result was, in their eyes, an official-looking web page. It prominently displayed a logo very similar to that of SAM.gov, the government website where businesses must register before seeking such contracts or grants. The site charged $597 for records, a not insignificant fee for Talbot and her husband. They had already invested a good chunk of their savings, about $100,000, in their fledgling family business Muddy River Machining. Still, she assumed it was necessary and paid the amount.
Only later did the Talbots realize that this site was in no way affiliated with the federal government, as they missed the fine print revealing this fact under the “Register Online Now” button and the logos that resemble that of SAM.gov.
Not only are SAM.gov registrations and annual renewals free, but personalized assistance with these processes is also available at no cost through government-funded nonprofit groups across the country.
Still, many companies with official-sounding names and websites that resemble SAM.gov, or sites that might suggest government affiliation, charge hundreds of dollars or more. Several lure unwitting customers like Talbot through Google ads that beat the legitimate SAM.gov page, illustrating the ease of buying visibility on the world’s largest search engine.
“It’s definitely predatory,” Talbot said in a phone interview. “We could have used that money to help with payroll, taxes, insurance, or even heat the building.”
The company Talbot paid, the Federal Register of Contractors, denies that its business practices are deceptive or predatory, stating that it has “always clearly identified itself as a ‘Third Party Service.'” On his website, after a query from NBC News, he replaced the logo that looks a lot like SAM.gov with his own.
While many websites that charge for assistance with SAM.gov registrations and renewals clearly state that they are not affiliated with the government and simply tout the ease of having third-party fill out forms online, others are less transparent.
Google removed the ads from several of these sites in response to a query about this article, but later reversed its decision.
“We have strict advertising policies that govern the types of ads and advertisers we allow on our platforms,” Google spokesman Davis Thompson said in a statement. “If we identify an ad that violates our government services or misrepresentation policy, we remove it immediately.”
Like other online intermediaries, Google is likely protected from liability for third-party content it hosts, including advertisements, by Section 230 of the Communications Decency Act.
A “substantial cottage industry”
The Federal Trade Commission recently proposed a new rule to crack down on the broader problem of government “spoofing,” a phenomenon that has cost consumers billions of dollars and is “highly prevalent and increasingly damaging, especially for small businesses,” said Christopher Brown. , an attorney in his marketing practice division. The most frequently impersonated government entity is the Social Security Administration, followed by Medicare, US Customs and Border Protection, the FTC, and then the IRS.
The FTC’s proposed rule would allow it to recover money from violators and apply civil penalties against them, but it still must go through a period of public hearing, further review, and a final vote by the agency, which could take months or years.
Even if the process drags on, the rule “would make a world of difference for consumers,” said Bonnie Patten, executive director of nonprofit consumer advocacy group Truth in Advertising.
As part of this process, Patten’s organization has filed comments with the FTC complaining about the Federal Register of Contractors, as well as the Federal Filing, the Federal Awards Administration Register, and others, referring to them as “imposters” who perform ” scams” to impersonate the federal government. without properly disclosing that they are private companies.
Before Truth In Advertising filed its complaint last summer, Federal Filing displayed the official SAM.gov logo at the top of its home page, while also disclosing near the bottom that it is “not a government agency.” , as well as on a separate FAQ page. . The logo has since been removed. Near the top of the site, the company now asks “Why work with the federal government” and “Why SAM?”
Federal Filing said Truth In Advertising was “unfairly targeting us because of suspected bad actors in our line of work.”
Like the Federal Contractor Register and Federal Filing, the Federal Award Management Register company used Google ads to attract clients. When asked for comment, he also updated his website, which featured a backdrop of the US Capitol and offered the chance to speak with a “federal contractor consultant.”
At the bottom of the home page was his only disclosure that he was an independent third party, with the following line: “Often the difference between winning and losing a contract is a small mistake that prevents proper presentation. Trust the experts so you can be sure your business is properly registered and fully qualified to apply for and win federal contracts.”
Following a query for this article, the site now provides an expanded disclosure in bright blue type and no longer shows the Capitol.
This was due to “ongoing changes” to the site, company owner Brad Anderson said by phone. He added that “99.9%” of customers understand that his site is not affiliated with the government and that it is the company’s competitors who are “grossly misrepresenting themselves.”
In an email, Federal Award Management Registration added in part that its representatives inform potential customers over the phone that it is “an independent party and they can do the SAM registration for free on their own.”
Even some sites that are more clearly distinguishable from SAM.gov, but appear near or at the top of Google search results for queries, have received complaints from customers who mistook them for the government. Among the many complaints filed against such sites with the nonprofit watchdog group Better Business Bureau, one person wrote about a website called the US Registry of Federal Contractors: “I thought it was a government website, but It was not”.
The individual said his charity paid $599 for a service that they later learned could have been completed for free. In a public response, the US Registry of Federal Contractors, which states on its home page that it is a “third-party” company, and in small gray-on-gray print at the bottom that “is not a government agency “, he said discloses this information “clearly”.
The company’s president and CEO, Eric Knellinger, said in a lengthy email that “instead of pointing fingers at the USFCR,” NBC News should “watch and report on the issues and problems with the Award System.” [sic] Management [SAM.gov] itself.”
As these companies continue to thrive without significant intervention, more and more are showing up.
“There’s a substantial cottage industry built around this,” said Ken Bloch, president of the Association of Procurement Help Centers, which provides free help with registrations and annual SAM.gov renewals. “Many of the companies that are victims of this are very small. They are family businesses, maybe five or 10 people.”
Free and ‘Superior’ Alternatives
The Federal Contractors Register, Federal Filing and Federal Awards Administration Register said they make it clear to their clients that they are not connected to the government and have never misrepresented their business. Each compared their services to filing taxes, a cumbersome and complex process that many people pay professionals to do, even though they can do it themselves at no cost.
But the Small Business Administration urges people not to spend their precious resources on these services when there are so many free alternatives. The SBA has dozens of district offices across the country, as well as business centers dedicated to helping women, veterans and other specific groups, offering free assistance with SAM.gov registrations and renewals.
“Save those resources to do the other administrative work that can be overwhelming for small business owners, like bookkeeping and annual taxes,” said Bibi Hidalgo, SBA associate administrator for government contracting and business development. “There’s no need to spend any of his hard-earned contracts on this.”
“There’s no need to spend any of his hard-earned contracts on this.”
Bibi Hidalgo, Small Business Administration associate administrator for government contracting and business development.
The US General Services Administration, which runs SAM.gov, said in an emailed statement that “no third-party company should impersonate SAM.gov for any reason,” noting that it “takes appropriate when we are informed of such impersonation. .” It did not respond to requests to clarify what such action entails.
Talbot has connected with your local Procurement Help Desk and plans to take advantage of their free support in the future. Already, she said, the help she has received free of charge has been “superior” to the services she paid hundreds of dollars for.
Until the FTC’s proposed rule goes into effect, Truth in Advertising’s Patten is concerned that more small business owners like Talbot will needlessly spend their money on SAM.gov registrations and renewals. She hopes that new and featured Google ads will play a role in the problem.
“As much as we’d like to hope Google doesn’t take money from scammers,” he said, “we’ve seen time and time again that that’s not how things seem to work.”