A putative class action in federal court in Newark charges that business research provider Dun & Bradstreet planted false information in companies’ credit reports in order to market a subsidiary credit repair service.
The suit was brought on behalf of New Jersey small businesses that purchased CreditBuilder, a product that enables them to monitor and dispute entries on their credit reports. It is sold by Dun & Bradstreet Credibility Corp. (DBCC), a D&B affiliate based in Malibu, Calif.
The named plaintiff, Altaflo Inc. of Sparta, N.J., claims D&B published a report in 2013 indicating that a high number of inquiries were made about its finances, causing its financial stress score to rise. When Altaflo inquired, it found that entries in the report were false, or double-counted, the suit says.
After multiple, unsuccessful attempts to have D&B correct the false data, Altaflo received a phone solicitation from DBCC, saying its files could be corrected by purchasing CreditBuilder for $799, the plaintiff alleges.
The suit, Altaflo v. Dun & Bradstreet Credibility Corp., includes claims under the New Jersey Consumer Fraud Act and for negligent misrepresentation and concealment, defamation and negligence.
Michele Caselnova, a spokeswoman for D&B, declined to comment on the suit. DBCC did not return a call for comment.
D&B, founded in 1841 and based in Short Hills, N.J., calls itself the world’s leading source of commercial information and insight on businesses.
According to the suit, D&B has a “virtual monopoly” on small business credit reporting. Businesses looking to work on federal government contracts or to apply for bank loans must have a Data Universal Number System (DUNS) number, assigned by D&B. And many government agencies and large corporations refuse to do business with a small company without a D&B Supplier Evaluation Risk (SER) rating, which runs from one (lowest risk) to nine (highest risk).
D&B allegedly has capitalized for some time on the importance of its reports by selling products that allow businesses to monitor entries, dispute inaccurate information and submit positive information to improve their scores.
In response to criticism and lawsuits over high-pressure sales of the products, D&B in 2010 created DBCC and transferred to it the rights to CreditBuilder for $200 million. D&B granted the subsidiary the right to use its logo and email and website addresses similar to those of the parent company, the suit says.
“DBCC misleads potential customers with deceptive misrepresentations or omissions which conflate DBCC with D&B or Dun & Bradstreet and position CreditBuilder as bearing the sponsorship of D&B,” the suit claims.
The suit alleges that D&B artificially raises the SER ratings of small businesses and then submits the changes to DBCC, which “solicits the swath of small businesses to purchase the product to enable them to improve their…rating.”
Named plaintiff Altaflo, a maker of high-performance tubing and pipe, says it “has made a substantial profit each year of operation” and has never, to its knowledge, been delinquent on any payment to vendors. But D&B notified Altaflo that it had been classified as at a “high risk” of bankruptcy, financial instability and delinquent bill payment, the suit says.
When Altaflo contacted D&B, it was notified of a late payment to an air conditioning company on its report. But Altaflo alleges the only air conditioning company it had dealt with was paid in full immediately after services were provided.
D&B and DBCC face a similar suit in federal court in Seattle on behalf of nationwide and Washington state classes of buyers of CreditBuilder. In January, U.S. District Judge Thomas Zilly denied D&B’s motion to dismiss.
Frank Janecek Jr. and Christopher Collins of Robbins Geller Rudman & Dowd in San Diego are the plaintiffs’ lawyers in both cases. They did not return calls. Neither did the plaintiff’s local N.J. counsel, Peter Pearlman, of Cohn Lifland Pearlman Herrman & Knopf in Saddle Brook.
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