There are numerous erroneuous myths about the business of screenwriting and even more scams that all writers need to watch out for. If you are concerned that an individual or company you are dealing with is not legit, your first stop should be Writer Beware. You can also email you question here.
1. Everywhere I go I am in danger of having my script idea stolen. - MYTH - unless you have an idea that is so unique no two film could ever be made about it, the idea alone is virtually worthless. It is always the execution that counts. Protect the script, not the idea.
2. I got an email inviting me to send my script to an agency! But they need me to pay some photocopying and mailing costs. - SCAM - First, legit agents never solicit clients unless they have just won a screenwriting contest or received a standing ovation at the Sundance screening of their new film. Second, photocopying costs, mailing expenses, reading fees, marketing fees, travel fees or any other type of fee that an agent, manager or other representative attempt to charge you is a SCAM. Agents signatory to the Writer's Guild are explicitly forbidden from charging anything other than a percentage of your writing income after they have made a sale. Find an agent on the WGA signatory list.
3. My new agent/manager seems great, but they didn't ask me to sign a contract. That must mean they are not the real thing. - MYTH - Surprisingly, many major Hollywood agencies and management companies rely solely on verbal agreements. However, a legitimate company should have no trouble providing a written contract if you request one (which is recommended).
4. My new agent/manager wants to use my query letter to send to production companies. - SCAM - This person has no connections and should not be representing you. Professionals do not send out your query letters or hold you responsible for providing any kind of marketing tools.
5. My new agent/manager says his client list is confidential, but he assures me he has sold many screenplays. - SCAM - Any agent/manager who can not tell you the name of at least one satisfied, verifiable client does not have any.
6. An agent says he wants to represent me, but first I must have coverage done on my script by a certain company. - SCAM - Most likely, the "agent" either owns the reading company or is getting a share of the profits. This is not someone who is interested in helping you with your writing career.
You may also, however, find yourself dealing with a legitimate agency who doesn't say this outright but rather sends you a brochure on a script reading company in response to your letter, thus implying the same thing. For this murky ground, which is somewhat unethical but nonetheless legal, read this very important article:
Slush Pile - Todd Longwell reports on unsolicited screenplays and the new screenplay consulting services (Filmmaker Magazine)
7. I read that script reading companies will get you an agent or manager or hook you up with a production company if your script gets a "Recommend". - SCAM - I should clarify, this can happen. To date, one reading company has made one script sale in this manner. But beware, what these companies don't tell you is that most of them will charge you a percentage of your earnings in addition to the reading fee you have already paid. Storybay, for example, charges 7.5% of your GROSS earnings. Studionotes and Scriptshark charge 10% of the profits. ScriptPIMP and StoryXchange both charge 5%. This is the same as paying two agents (plus a reading fee). It is definitely not recommend.
source: http://www.thescriptsource.net/Myths&Scams.html
