The Federal Trade Commission (FTC) has launched an inquiry into the small business credit reporting industry, with five firms, including Dun & Bradstreet, Experian Information Solutions, Equifax, Ansonia Credit Data, and Creditsafe USA, ordered to provide the Commission with detailed information about their products and processes.
The FTC inquiry aims to address the lack of specific laws that outline processes and protections available to small businesses when it comes to credit reporting. The lack of transparency and the difficulty small businesses face in navigating how to correct errors or omissions in their credit reports in a timely fashion have made the situation complicated.
FTC Chair Lina M. Khan said, “This FTC inquiry will shine a much-needed light on the credit reporting industry and the related challenges that small businesses face.”
Business credit reports significantly impact small businesses, potentially impacting the terms on which they can obtain the goods, services, and equipment they need to stay in business. Credit reporting companies start developing a company’s credit report at the time of incorporation, tapping public records and other available financial data, which means business owners may not even be aware that a report about them exists.
The inquiry will examine multiple aspects of how information is collected and processed for business credit reports, how the reports are marketed, and how and whether the credit reporting companies address factual errors in the reports. The orders also require the companies to provide information on services they provide to businesses to monitor or enhance their own credit reports.
The FTC is issuing the orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct studies without a specific law enforcement purpose. The companies will have 60 days from the date they receive the order to respond.
Last April, the FTC secured an order with Dun & Bradstreet in which the company was required to make changes to its processes to help ensure that it responds promptly and fully to businesses’ complaints about incorrect information in their business credit reports. The company was also required to provide refunds to affected customers, and to make it easier for customers to cancel certain business credit report monitoring and managing products.
The Commission vote to issue the orders was 4-0.
