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Volume XII, Number 146

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FTC: Provider of Business Credit Reports Engaged in Deceptive and Unfair Practices, Refunds Customers

On January 13, the FTC announced that a leading business credit report provider agreed to settle allegations that it had engaged in deceptive and unfair business practices.  The FTC alleged that businesses complained of costly errors in the credit reports, which the company failed to remedy.  Additionally, the company’s suite of credit-improving products costing business hundreds or thousands of dollars per year failed to provide any real benefit to businesses.  Also, the company’s telemarketers deceptively pitched another service to businesses and falsely claimed that the businesses had to purchase the service for the company to complete the business’s credit profile.  Finally, the company allegedly did not disclose to businesses that the service’s subscription is automatically renewed each year, nor did it properly disclose other renewal practices that led to increasing costs.

Under the terms of the proposed order, the company will be required to, among other things:

  • Promptly investigate and correct errors within a specific period of time and inform businesses of the results of their investigations;

  • Provide businesses with free access to the revised credit information;

  • When a business informs the respondent of incorrect information in its report, either delete the disputed information or perform a reinvestigation of the information to confirm its accuracy; and

  • Provide refunds to certain businesses that purchased its service products and to provide opportunities for current customers to cancel their services and obtain refunds.

Putting it Into Practice:  This case demonstrates the FTC’s commitment—and recent focus—on protecting not only individuals, but small businesses from deceptive business practices. Just a few weeks ago, the FTC settled allegations against two of the defendants behind a merchant cash advance provider, in an alleged small business financing scheme (we discussed this recent case in a previous Consumer Finance & FinTech Blog posts here).  Working primarily or exclusively with a customer-base of other businesses is not a shield of protection against FTC scrutiny when it comes to consumer protection. Companies that serve individuals and businesses alike should therefore ensure that representations made to their customer-bases are clear and accurate. Companies should also have a consistent, prompt, and transparent system for dealing with customer concerns and complaints

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 21
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Katie Daw Government Investigations Attorney Sheppard Mullin Law Firm
Associate

Katie’s practice focuses on government investigations into antitrust and competition issues and antitrust litigation.

Prior to joining the firm, Katie completed internships with United States Senator Dianne Feinstein and with United Kingdom Member of Parliament Graham Allen, for whom she conducted nutritional poverty research and drafted initiatives. She also served as a law clerk for the Baltimore Police Department, where she focused on compliance with the city’s consent decree entered into with the Department of Justice.  

202-747-2191
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