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Credit Fraud or Coincidence?
By Kym Price, C.B.A.

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Digging Deeper into a Company's Credit History

One of my clients asked me to comment on these facts:

  • They received a credit application, along with an order for just over $5,000

  • The application contained ten trade references. Several of the credit references had been contacted, and reported positively about the applicant company.

  • The credit report ordered on the applicant showed a moderately successful company that paid its creditors fairly well...but

  • The credit report showed the applicant company was located at a different address but in the same city as 'our' applicant.

Rather than jumping to conclusions, I called the phone number listed on the credit report. I confirmed their address...and I confirmed they did not have another location in the same city. I spoke to my client's new accounts clerk...I confirmed that she provided only the company name, city and state to the trade references she had contacted - and for the credit report she ordered. I guessed that she might have received references on the other company - the one with the same name. I asked her to re-contact the trade references, to explain that there were two companies with 'similar' names and to provide the street address for our applicant company, and to re-check the references. It turned out that all of the trade references we had received were on the 'other' company - not on our applicant.

I would recommend that any time you request a credit rating or order a credit report that you list the company's full name, any d/b/a's and their complete address and telephone number. This way, you know you are getting information on the right company. I recommended to my client that they not respond to credit rating requests unless they are given to 'target' company's complete address.

Was this an attempted credit fraud, or just a strange coincidence. I suspected the former, but was willing to accept the latter. I recommended that my client reject the applicant based on the lack of trade references.

Disclaimer: The information provided in this Bulletin is not legal advice and is not a substitute for legal advise. Readers are encouraged to contact an attorney to discuss any questions that may arise after reading this Bulletin with their attorney to clarify any of the issues raised.

Reprinted with permission from the Covering Credit Newsletter 9/02/03 Edition

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