RINGS OF FIRE
Linking your company’s positive payments to your D&B® report can boost your credibility by as much as 90%, but attempting to do so through a non-verifiable transaction or “trade ring” vendor can be devastating to your business credit profile. If the transaction or vendor cannot be verified by D&B®, this could bring your profile under unnecessary scrutiny and could harm both businesses — possibly embroiling you and your business in extensive, and expensive, legal battles.
Can your trade references clear the rings of fire and get added to your credit profile without your company getting burned?
Adding vendors and suppliers can be extremely beneficial, but each of these references will need to undergo a multi-step validation before even being considered as a possible candidate. D&B® looks very closely at any potential trade references to make sure they will pass all stages of the validation process. They will check a variety of factors — from their industry, to their physical location, to their own D&B® report status — even delving into your vendor’s state or federal documentation. D&B® does this because it is their job to ensure any data they input into your report correctly reflects true payment habits, since this is the basis for any additional credit lines others may extend to you.
Oftentimes, business owners who have no credit history will ask friends or relatives to manufacture positive payment experiences in an attempt to portray non-existent credit limits, thinking this will help them to achieve higher approvals or build their credit profile faster. These fraudulent attempts seldom make it through D&B®’s tight net. Most will get declined in the preliminary processes and go no further.
D&B®, however, does not just blindly discard the information they have just attained in the process. They hold onto every little tidbit they have learned as part of their extensive data gathering network, and then watch for patterns or trends among vendors or vendor types. They draw parallels between these businesses and their clients. If these parallels begin to trend toward activity that could be perceived as fraudulent, D&B® may investigate further to see if these businesses are acting as a “trade ring” for each other.
Trade rings are companies who provide false or inflated credit histories about their friends, relatives, colleagues, or business associations in an effort to portray a rosy image of an otherwise not-so-impressive picture. They will do this for a number of businesses within a certain circle, whether that circle encompasses just a few close friends or a hundred or more associates. They can do this in many ways, but few are successful. There have been companies who qualify as a viable vendor who boast of an ability to provide a positive payment history to D&B® “for a nominal fee”.
There are people who form multiple businesses solely for the purpose of reporting good credit from one to another. There are companies who take advantage of those who are less knowledgeable in this area to convince them to provide misrepresentations, ultimately causing irreparable harm to both their business reputations. It is almost as if they think they are the first to have conceived this ill-fated technique.
Fortunately for the bulk of the business credit community as a whole, 175 years of data collection has taught D&B® many hard lessons along the way. They have been burned by these types of strategies and now block them time and time again. Like the internet wizards who can spot a scam from a mile away, D&B® can usually identify a potential tactic. They have made it their business to keep the foxes (crooks) from being able to rob the proverbial hen house (creditors).
For every sly, manipulative trick out there, D&B® has continued to tighten the net, placing more strict guidelines in the paths of honest business owners who are struggling to get the simplest of legitimate transactions placed into their files. What some shysters may think is the newest trick of the day turns out to be another hoop that the average Joe will need to jump through in order to succeed.
Trained to spot these tactics and irregularities that can throw up the red flags of risk in D&B®’s eyes, we know if we can see there is a potential problem, there is absolutely no doubt that D&B® will see it, as well. When they do, they will roll out the roadblocks to your success.
D&B may make pre-determinations that a vendor or transaction is illegitimate or that you are attempting something untoward — so you should avoid potential roadblocks. Reality is – we live in a cruel world where innocently using one another to report on your mutual business experiences can draw suspicion, even if everything is 100% on the up-and-up. If the transaction is perceived to be fraudulent, both companies can be flagged as Severe Risk and completely blocked from making any possible forward progress.
Like an infection, this red-flagged status can also spread to other businesses inside and outside the circle and has the potential to be catastrophic, even for other legitimate businesses who have reported verifiable transactions on your behalf.
LESSON: Providing false or misleading information for the purposes of obtaining credit is a felony, punishable by up to 30 years in prison and a $1,000,000.00 fine.