Businesses operators are being reminded to check their credit scores and be aware that mistakes can be made about their information by third parties, after a business owner had his credit frozen due to an error made by credit reporting agency Veda.
As reported by Fairfax, last year the Privacy Commissioner ordered Veda to pay $15,830 to a business owner after the credit reporting agency mistakenly recorded a judgment debt of $7000 against his credit file.
The man, identified as KB, took his complaint to the Privacy Commissioner, who found a breach of privacy had occurred because Veda had failed to take reasonable steps to ensure the information it had about its clients was correct.
The debt actually belonged to another individual with a similar name to the business owner, who resided in a different premises but in the same apartment building. But the error triggered an automatic alert to KB’s creditors, which resulted in American Express cancelling his credit card.
He also owned two businesses and had given suppliers details of a Citibank credit card, which was also suspended, causing delays in payment and supply of goods.
The individual was travelling in Italy when he discovered his cards had been cancelled. On returning to Australia and seeing a copy of his credit report, Veda advised him that he would need to approach the court for a correction.
A spokesperson for Veda told Fairfax “the error occurred due to multiple identical pieces of critical information”. SmartCompany contacted the company for further comment on the situation this morning but Veda said it was unable to provide additional information on the case.
Keep an eye out for errors
Founder of Healthy Business Finances Stacey Price tells SmartCompany that while it is uncommon, businesses can be pursued or have incorrect debts recorded against them on occasion due to the sheer number of business names out there.
“In this day and age there’s a lot of people with very similar business names and it’s easy to chase the wrong people,” Price says.
“I know I’ve had a couple in the past where I’ve had a client “ABC” and something has been sent to “ABCD”. You only need a tweak, like some businesses have an ‘S’ at the end.”
However, Price believes credit reporting agencies should really be going beyond company names and addresses when it comes to recording information, for example, by matching up Australian Company Numbers to avoid incorrect data from being recorded.
“If checks were in place, they shouldn’t just be checking on business names,” she says.
The tracking of business’s debt information has been in the headlines recently after the federal government outlined in the Mid-Year Economic and Fiscal Outlook (MYEFO) to allow the Australian Taxation Office to pass on information about business debts to credit reporting agencies.
While thinking about credit scores might not be top of your list when you first establish a business, Price advises it is worth putting a routine in place so that you can regularly see what information others can find out about your business.
“Just do a check up every six months—check your credit rating. I even Google my own business name to make sure nothing has been said that I don’t have control of,” she says.
And while Price says using credit agencies can benefit businesses, it’s always worth checking the fine print around company processes and privacy.
“I think a lot of it is in the small print—by signing up to those platforms you do sign up to the terms of conditions,” she says.