The Federal Trade Commission (FTC) announced that it is launching an inquiry into the small business credit reporting industry. Specifically, it is ordering five firms to provide detailed information about their products and processes.
According to the FTC, the impetus for this inquiry is that unlike consumer reports, which are governed by the Fair Credit Reporting Act, there is no federal law that specifically outlines processes and protections for small businesses credit reporting. The FTC says this can cause confusion, particularly for small businesses attempting to correct errors or omissions. According to the FTC, “[s]ometimes small businesses only discover they have a credit report when they are denied credit by a supplier.”
The orders issued to the five firms require them to provide:
- Their processes for gathering, generating, and organizing data related to small businesses.
- The steps taken to ensure that the information contained in the credit reports is accurate.
- The number of data contributors with which they currently have data contribution agreements and the steps taken to ensure the data provided is accurate.
- All business credit scores that are included in their reports, and the factors, information, and data included in arriving at each business credit score.
- Any algorithms, machine learning, or other automated systems that are used in relation to the business credit report data.
- All free-of-charge services available for entities to view their own report or information.
- Information about credit monitoring products that they sell, including sales revenue.
- Information about marketing materials used to sell small business credit reports, including gross sales revenue.
- Any practices or product features to provide updates or corrections to business report customers in situations where information about an entity is corrected after the report is obtained.
The firms will have 60 days after service to respond with the requested information and documents.