The Federal Trade Commission (FTC) has launched an inquiry into the small business credit reporting industry, requesting five companies in the industry to provide detailed information about their products and processes. The orders were issued to Ansonia Credit Data, Creditsafe USA, Dun & Bradstreet, Equifax, and Experian Information Solutions. There is no federal law governing processes and protections for small businesses regarding credit reporting, unlike credit reports for individual consumers, which are governed by the Fair Credit Reporting Act. The inquiry will examine how credit reports are collected and processed for businesses, how they are marketed, and whether credit reporting companies address factual errors in the reports. Additionally, the companies must provide information on services they provide to businesses to monitor or enhance their credit reports. The reports can significantly impact small businesses, affecting the terms on which they can obtain goods, services, and equipment, and it can be challenging for small businesses to navigate how to correct errors or omissions in their credit reports. The FTC is issuing orders under Section 6(b) of the FTC Act, which authorizes the commission to conduct studies without a specific law enforcement purpose. The companies have 60 days from the date they receive the order to respond. The Commission vote to issue the orders was 4-0.
According to FTC Chair Lina M. Khan, “Like consumers, small businesses rely on fair and accurate credit reports in order to access key services. But because it isn’t covered by the same laws that apply to consumer services, credit reporting for businesses is tremendously opaque. This FTC inquiry will shine a much-needed light on the credit reporting industry and the related challenges that small businesses face.” Many credit reporting companies begin developing a company’s credit report at the time it incorporates, tapping public records and other available financial data, and business owners may not even be aware that a report exists about them. In some cases, small businesses only discover they have a credit report when they are denied credit by a supplier.
In April 2022, the FTC secured an order with Dun & Bradstreet, requiring the company to make changes to its processes to 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 make it easier for customers to cancel certain business credit report monitoring and managing products.