False report triggers £5m loss, claims firm

Essex flooring contractor Loughton warns that credit report by D&B falsely implied financial difficulties.

Contractors have been warned to check their current credit rating reports after one company claims that it lost around £5m in projected revenue over a nine-month period due to a false report by respected firm Dun & Bradstreet (D&B).

The losses for Essex-based flooring contractor Loughton Contracts, which have been estimated as much higher by its quantity surveyor based on its contracts win ratio, resulted from a false credit report, posted by D&B. This stated that the company had an unpaid debt of £3m and took on average over 100 days to pay.

In fact, Loughton had no debts and paid all its creditors within 28 days.

Loughton said that anyone reading the report could only have presumed that it was highly likely that the company had serious financial problems and was on the verge of defaulting on its debts and going bust.

Unaware of the report's publication, Loughton, which during the time of the posting was bidding 300 tenders for around £52m of works - £32m of which had values in excess of £100,000 - was starting to wonder why it was missing out on making tender lists. Loughton said that previously it had a 100% record due to its competitive pricing.

Loughton was only alerted to the false credit rating by an associate.

When approached by Loughton, D&B removed the inaccurate text from its report, but refused to amend the historical data and diagrams which still showed the false information.

D&B only agreed to amend this inaccurate data when threatened with legal proceedings.

In the wake of the case, D&B has reassessed the company with a credit rating of 2A-1 - thought to be one of the highest in the flooring industry.

Loughton, which has financially recovered from the setback, told Contract Journal it had recently received an "insulting" out-of-court offer.

D&B has refused to list the names of the clients who would have seen the false report for confidentiality reasons Loughton has had to write to all of the companies that it submitted tenders for to explain the circumstances.

"The arrogant stance taken by Dun & Bradstreet has to be experienced to be believed," said Loughton chairman Derek Smyth. "Apparently, D&B believes it can do no wrong.

"In my view, it has attempted to avoid its responsibilities."

D&B said in a statement that its report on Loughton contained inaccurate information as a result of incorrect data provided to it by a supplier.

It added that the position was corrected immediately it was drawn to D&B's attention. It said that all customers of D&B who received the inaccurate report were immediately contacted and provided with a corrected report, and that D&B had apologised to Loughton.

[Contract Journal, 6 September 2006, p 1]