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D&B Faces Federal Class Action Alleging “Pay To Play” Scam

Posted  January 15, 2013

The plaintiff in a federal class action filed in the U.S. District Court for the Eastern District of Washington is accusing leading credit reporting company Dun and Bradstreet (“D&B”) and Dun and Bradstreet Credibility Corporation (“DBCC”) of conspiring to use high pressure sales tactics to create a monopoly in the small business credit reporting market.

The complaint in O&R Construction, LLC v. Dun and Bradstreet Credibility Corporation alleges that thousands of small businesses were “deceived, misled and cheated” by D&B and DBCC in a “pay to play” scam that sold credit products in exchange for favorable credit ratings.

Plaintiff O&R Construction claims D&B and DBCC misled small businesses into believing there were problems with their D&B credit reports in order to defraud them into buying DBCC’s “CreditBuilder” line of products to improve their credit ratings.  Plaintiff alleges D&B and DBCC violated antitrust laws by conspiring to make the CreditBuilder products the only products available on the market that can address D&B’s small business credit reports.

Dun and Bradstreet has been a credit reporting agency for over 150 years.  The company has used its database of business credit information to develop a product that small businesses can use to monitor and improve their credit rating.  The complaint alleges that D&B spun off DBCC to sell the credit monitoring products and gave DBCC an exclusive license to use the small business data.  O&R argues that the 2010 agreement granting DBCC an exclusive license to D&B’s credit database has prevented new companies from competing in the market.

According to the complaint, D&B and DBCC have used fraudulent sales tactics, including scaring business owners by falsely telling them they faced several credit inquiries because their ratings were low.  However, unless the small businesses purchased DBCC’s CreditBuilder to monitor their credit, they could not find out who had made the inquiries and improve their rating.  The complaint also alleges that D&B would downgrade a business’s credit rating if it cancelled its CreditBuilder service.

O&R, which provides remodeling services mostly for government contracts, relies on D&B to provide accurate credit reports so that it can work with vendors.  O&R alleges that Home Depot, for example, decreased O&R’s line of credit after D&B downgraded O&R’s credit rating, which followed O&R’s cancellation of the CreditBuilder service.

“Defendants are colluding to negligently, recklessly or intentionally falsify information in small business credit reports,” O&R alleges.

Tagged in: Antitrust Litigation, Monopolization,