�鶹��ý

Small businesses, the FTC is on your side. According to a proposed FTC settlement with Dun & Bradstreet, D&B took big bucks from small businesses with the promise to improve their credit reports, but the primary business that benefited from D&B’s pricey services was Dun & Bradstreet itself.

The FTC alleges that Dun & Bradstreet deceived companies about the purported benefits of its CreditBuilder line of products; used deceptive automatic renewal practices, including a switcheroo that transferred customers into a much more expensive tier of service without clear notice; and reported inaccurate information on businesses’ credit reports without providing a reasonable process for fixing errors. The proposed settlement will require the company to give refunds to many customers and to change its practices to help ensure that D&B responds appropriately to complaints from all businesses about incorrect information in their D&B reports.

For years, the FTC has warned consumers about the injury that can result from errors on their credit reports or when their payment history isn’t accurately reported. That applies to businesses, too, especially given that Dun & Bradstreet maintains commercial credit reports about more than 300 million of them worldwide. Even according to D&B, an inaccurate (or incomplete) D&B credit report can put a crimp in a company’s ability to attract new customers, increase cash flow, negotiate better contract terms with suppliers and other businesses, and improve its financial health. So, errors on a business’s credit report – even mistakes about the business’s name, address, and other basic information – can have big consequences for small firms.

The complaint alleges a number of ways in which Dun & Bradstreet used deceptive claims to promote its products. Just one example was D&B’s promise that small businesses could easily add payment experience information to their reports. A business that spotted inaccurate or incomplete payment information in its D&B report had only one place to turn: to Dun & Bradstreet itself. And how did Dun & Bradstreet respond? Often by pitching its CreditBuilder line of services, including what D&B described as “credit-on-self” products, which supposedly allowed small businesses to add their payment history information to their own credit reports.

You’ll want to read the complaint for the inside story about what Dun & Bradstreet was up to, but it boils down to this. D&B sold its services by telling small businesses they could just submit the names of the companies they worked with, and D&B would contact the companies to verify the small business’s payment history and add the information to its credit report. D&B described it as “a really easy process.” After getting some additional information from the small business, D&B said it would “basically take over the rest from there.”

That’s what Dun & Bradstreet promised, but the FTC says that after paying D&B thousands of dollars for its services, most small businesses got much less than they bargained for. As the complaint alleges in detail, D&B “does not help subscribers in their efforts to have payment experiences added to their credit report” and “rejects a majority of the submissions.” The upshot: “[T]housands of businesses that have paid for these products cannot get even a single payment experience added to their credit reports.”

The FTC also says that Dun & Bradstreet pitched CreditBuilder to new businesses by falsely claiming that the business had to buy the product so D&B could conduct a background check and get the company a completed D&B credit report.

The lawsuit alleges that Dun & Bradstreet’s mistreatment of small businesses didn’t end there. Just as some companies mislead consumers with deceptive claims and practices related to automatic renewals – conduct the FTC has challenged as illegal – the lawsuit says Dun & Bradstreet targeted businesses with similar tactics. For example, D&B told some customers that at the end of their subscription term, their service would be automatically renewed and they would be charged at the “then current price.” What D&B didn’t disclose was that this could result in hefty price increases. In fact, customers who signed up for a $499 annual subscription could end up being charged $1,599 per year for a different product, without adequate notice of the change. And D&B would charge the “then current price” only if it was financially advantageous to D&B. If the price went up, customers were billed the higher price. If the price went down, customers were charged the previous – higher – price. In other words, heads, D&B wins and tails, small businesses lose.

In addition, the complaint charges that D&B’s practice of reporting incorrect information on affected businesses’ D&B credit reports without providing a reasonable means for them to dispute the misinformation is an unfair trade practice, in violation of the FTC Act.

Among other things, the proposed settlement will require D&B to implement procedures that will have the far-reaching effect of giving all businesses a way to challenge inaccurate information on their D&B credit reports. Under the terms of the order, D&B must investigate complaints about inaccurate reports either by deleting the disputed information or by conducting a reinvestigation that includes considering information the business submits in support of its dispute. The reinvestigation also has to be completed within a specified number of days, depending on the type of information the business is disputing. If the reinvestigation finds that the disputed information is inaccurate, D&B must correct it within a specified timeframe – which for many of its products, means within just a few days. If D&B can’t verify the payment information it’s reporting, it must delete the information and take steps to see that it doesn’t show up later on the business’s report.
 

In addition, D&B must make a number of up-front disclosures about the nature of its services. The proposed order also puts restrictions on D&B’s ability to automatically renew CreditBuilder subscriptions, including a prohibition on D&B using automatic renewal to switch a subscriber into a different product or to charge a higher price for the same product without giving clear and detailed notice of the increase and information in advance on how to cancel.

The settlement also requires D&B to provide refunds to many businesses that first bought CreditBuilder products between April 2015 and May 2020 and to give many current customers the opportunity to cancel their subscriptions and get refunds. Once the proposed order is published in the �鶹��ý Register, the public has 30 days to comment.

What can small businesses take from the case?

Pause before committing to buy business services. According to the complaint, D&B’s sales calls were rife with deceptive claims. One of the best defenses to information – and misinformation – overload is to take things slowly. Give yourself time to consider whether an expenditure makes sense for your company.

Centralize subscription purchases. Whether it’s a standing order for supplies or an automatically renewing subscription, it’s wise for small businesses to centralize ordering in one place. Pick your most persnickety personnel to go over monthly credit card statements. They may spot new subscriptions you didn’t approve or increased prices you didn’t authorize.

Consider a periodic subscription review. For consumers and businesses, subscriptions can be time-saver, but only if what they deliver is what your company needs. Evaluate recurring charges regularly to make sure that a product or service that your business signed up for years ago still serves your purposes.

Have you spotted a questionable renewal or billing practice?