Last week, the Federal Trade Commission (FTC) announced that it agreed to settle claims against Dun & Bradstreet (D&B), a business credit reporting agency engaged in deceptive and unfair practices with small and mid-sized business customers.
The FTC’s complaint primarily stemmed from businesses’ claims that error-ridden reports negatively affected business opportunities and that D&B’s offered credit-monitoring products did not easily improve credits scores and ratings as suggested. According to the order, D&B will have to adjust its operational practices in favor of its business customers.
Under FTC Chair Lina M. Kahn, the agency has been utilizing tools to affect broad swaths of the economy and certain industries. The FTC is using a traditional administrative cease and desist order to resolve small businesses’ credit reporting concerns – a continuation of the agency’s broad definition of “consumer” to challenge conduct directed at small businesses. The same concerns at issue in this case involving small business mirror those in many consumer cases, including credit reporting, deceptive telemarketing, and inadequately disclosed renewal terms.
According to the FTC’s D&B complaint, the reporting agency’s credit-monitoring products’ data included errors of even basic business information. When attempting to correct information, businesses were often offered D&B’s line of credit-monitoring products that were promised to develop a history of payment information to improve customers’ scores and ratings.
The FTC alleged that the reality was that businesses needed to devote significant amounts of their own effort, time, and expense to resolve D&B’s errors, and that without that effort errors would have remained in reports. The FTC’s complaint insists that D&B’s telemarketers made misleading claims to several new or unacquainted business customers by saying that a credit file could only be completed with the purchase of its credit-monitoring products. The FTC also claimed that as subscriptions were ending, some customers were automatically renewed at higher prices without their knowledge.
Under the proposed order here, D&B will have to do the following, among other things:
- Change operational practices that will assist businesses with correcting their reports, including deletion or reinvestigation of disputed information within certain time periods and a way to receive free results of revised information;
- Clearly disclose its limited involvement in adding to a customer’s history of payment information and its rates of accepting customers’ requests to add payment information;
- Provide disclosures for automatic renewals, and do so without placing a customer’s subscription level to a more expensive one not ordered; and
- Give customers refunds or allow them to cancel a current subscription.
In the climate of increased investigations by the FTC, companies should constantly improve business practices when serving customers (both individuals and businesses), telemarketing, and making sales. All the more important as the new year brings with it higher penalties for potential violations, including a raised civil penalty of $46,517 for violations of the FTC Act (Sections 5(l), 5(m)(1)(A), and 5(m)(1)(B)).