Have you ever heard of a company called Dun & Bradstreet? They are 'sort' of like Experian for businesses - supposedly helping their subscribers to make credit decisions about suppliers. Recently a potential client of one of our company's ran a D&B report on our company. The score came back very low and the company scored a 7 on a 9 point scale of likeliness of failure. Ouch. I contacted D&B and asked them what the issue was. They indicated that they only had four of our vendors reporting payment history and one of them reported a 90 day late payment of $50. I was flabbergasted. They were publicly reporting that our business was likely to fail (7 out of 9) because one of four vendors indicated that we were late on a $50 invoice. The D&B rep indicated that I could pay approximately $400 and begin 'building' my report through a tool called Self Monitor. I paid the fee and began adding my vendors to the system.

The company pays out around $250, 000 in payables each month to more than 100 vendors. Additionally we have credit lines ranging from $1, 000 to $500, 000. Out of these vendors D&B only had four. Our controller added more than 100 vendors and we were surprised how many would not agree to report payments to D&B. Companies like AMEX, Chase and Ingram Micro were unwilling to share credit history with D&B - later I learned they didn't want to pay D&B a fee for the pleasure. Evidently, D&B is collecting fees from the companies that report and from the companies that are reported on. Wow.

One week later we were able to raise our 'PAYDEX' score from 66 to 77 by just adding a few additional vendors to the system. This morning I got an alert from D&B explaining that they had INCREASED our companies financial risk number from 7 to 8 - meaning they estimated that there was a HIGH risk of our company's failure in the next 12 months. Our 'PayDex' score was improving, but D&B is now reporting that we are likely to fail. This company is ten years old and has been profitable since 2002 - why would D&B suggest we were likely to fail? What data are they using to come to this conclusion. Here is the chart the D&B account rep showed me:

Just a week after we opened out account with D&B and began helping them build our credit someone in the computer manufacturing business suggests that we have a payment 61-90+ old that is less than $1, 000. I talked to our controller and she has no record of any late invoice - much less one for less than $1, 000. I asked the D&B rep who was reporting the 61-90+ day late payment, but they would not release the name of the vendor. I assume the vendor who reported the late payment wants to get paid - why wouldn't they want me to be able to contact them to get paid? The D&B rep couldn't explain why the policy was this way. I then asked the D&B rep why they would issue a public report that we were likely to fail despite the fact that 99% of our vendors are reporting we pay within terms? I reiterated that we spend about $250, 000 a month in payables - it seems crazy that a company would publicly report that we were likely to fail because an anonymous company reported that we were late on an invoice less than $1, 000. She could not explain why.

I think there is a potential for a massive class action against D&B on several counts - but most importantly their propensity to offer credit advice without sufficient data. D&B should have to disclose that on accounts, like ours, they simply don't have enough data one way or another. They can't possibly know whether or not our company is likely to fail based on the data they have collected. Their data is used by our potential clients to hire us. How many clients have looked at this data and decided that since we are 'likely to fail in the next 12 months' they will choose another vendor? How many other clients have low PAYDEX scores and 'High Risk of Failure' warnings where there is little or no data available? I would be happy to sign our company up as a lead plaintiff. I can show a loss of at least $1, 000, 000 in billings as a result of their 66 Paydex report on our company. Let me know if you want to join by filling out this form: D&B Class Action Sign Up