NEW YORK–To settle charges brought by the Federal Trade Commission that it engaged in deceptive and unfair practices, Dun & Bradstreet (D&B) has agreed to an order requiring substantial changes in the firm’s operations that the FTC said will benefit small- and mid-sized businesses.
Under the proposed order, D&B will also provide refunds to certain businesses that purchased the company’s products in the belief that using the products would improve their business credit scores and ratings.
“D&B is a leading provider of business credit reports, which can impact firms’ ability to build relationships with vendors and other counterparties,” the FTC said in announcing the settlement. “But many businesses have complained of errors in these reports that have cost them time, expense, and opportunities. As detailed in the FTC’s administrative complaint, D&B failed to give these businesses a clear, consistent, and reliable process to get these errors fixed. Moreover, D&B profited from businesses’ pain by selling them a line of products that purported to help them improve their reports. In fact, for many businesses, these benefits proved illusory, while the costs were all too real.”
“A faulty D&B credit report can be a huge burden on a small business, raising costs and choking off opportunities,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “This order arms businesses with new tools to ensure a fair shake, stops D&B from profiting illegally from businesses’ pain, and returns funds to firms that got fleeced.”
The FTC complaints noted D&B credit reports, ratings, and scores are often key factors in whether and on what terms businesses will extend credit or award contracts to other businesses.
“This means that the contents of D&B reports can be vitally important to many small and mid-sized businesses,” the FTC said. “In many cases, however, the reports contain incorrect information, including items as fundamental as a business’s name or address. Often, when a business would question or try to correct an inaccuracy in its report, D&B pitched a suite of services under the name CreditBuilder costing hundreds or thousands of dollars each year.” According to the FTC’s complaint, D&B claimed that its CreditBuilder products allowed the business to have its payment history added to its credit report, which would improve the business’s scores and ratings.
‘Failed to Deliver’
According to the FTC’s complaint, though, the company regularly failed to deliver on its promises about CreditBuilder.
“While D&B’s salespeople pitched CreditBuilder by promising businesses that the product would make it easy for them to add payment history information to their credit reports, thousands of CreditBuilder subscribers could not get any such information added to their reports at all,” the FTC said. .”In fact, the complaint alleges, D&B refused CreditBuilder subscribers’ submissions more often than it accepted them.”
The FTC’s complaint further alleges that D&B’s telemarketers deceptively pitched CreditBuilder to new businesses and to businesses unfamiliar with D&B by falsely claiming that the business had to purchase CreditBuilder so that D&B could conduct a background check and provide the business with a complete credit report.
In addition, according to the complaint, D&B did not clearly tell businesses that CreditBuilder subscriptions automatically renewed each year, nor did it properly disclose other renewal practices that led to ever-increasing costs for its customers.
Terms of Settlement
Under the terms of a proposed settlement order, D&B would be required to make numerous changes to its processes that will help ensure that D&B responds promptly and fully to businesses’ complaints about incorrect information in their D&B reports.
Among the notable changes, according to the FTC:
- When a business informs D&B of incorrect information in its report, D&B will be required to either delete the disputed information or perform a reinvestigation of the information to confirm its accuracy. If the reinvestigation finds the disputed information to be inaccurate, or if it cannot verify payment experience information, D&B must delete the information and must also ensure that it is not readded to the report at a later date.
- D&B has to comply with specific periods of time within which to promptly investigate and correct errors. The time allowed depends on the complexity of the investigation.
- D&B will be required to inform businesses of the results of their investigations and provide businesses with free access to the information as revised.
Other Terms of Settlement
The settlement also provides that D&B must make clear disclosures to companies to which it is selling CreditBuilder about the rate at which D&B accepts subscribers’ requests to add payment history information. D&B would also have to make up-front disclosures about ways that D&B limits its role in helping them add such information. These provisions will help prospective customers make informed choices when deciding whether to subscribe to D&B’s CreditBuilder products.
The settlement would also require D&B to provide refunds to many businesses that first purchased CreditBuilder products between April, 2015 and May, 2020, as well as providing opportunities for many current customers to cancel their services and obtain refunds if they so choose.
In addition, the settlement would put restrictions on D&B’s ability to automatically renew CreditBuilder subscriptions, requiring disclosures and prohibiting D&B from using automatic renewal to switch a subscriber into a more expensive product that the subscriber did not order. The settlement would also prohibit D&B from misrepresenting to current or potential customers any material fact about the price or features of any product.