The Virginia Small Business Commission, which studies bills and makes recommendations to commonwealth lawmakers, will consider House Bill 2198 at their next meeting on June 26.

HB 2198 originated in the Virginia House of Delegates and would require commercial credit reporting agencies to provide the subject of a credit report with information that identifies the source of what the bill calls “negative information” on their commercial credit report.  The bill fails to define what constitutes “negative information,” which means that a commercial credit report provider might have to identify the source of any trade creditor that shares negative credit references or negative accounts receivable information with the credit reporting agency.

The bill also includes measures that would needlessly codify the right of the subject of a commercial credit report to view their report, which companies can already do, for free, at any reputable provider of commercial credit reports. Another provision in the bill would further weaken the quality of commercial credit reports on Virginia businesses by stipulating that credit reporting companies must respond to the subject of a report’s disagreement with a statement in the report by either deleting the item, or by noting that it is in dispute. This would reduce a credit report to “a catalog of uncertainties,” said NACM in a letter to State Sen. Frank Ruff Jr. and Delegate Daniel Marshall III, chair and vice chair of the Small Business Commission, respectively.

“Businesses looking to extend credit to other businesses have the right to know whether or not their potential customer pays its bills, and many of them believe that sharing data on a customer, even or especially if it is perceived as negative, is part of conducting responsible commerce,” said the letter. “Currently, however, HB 2198 would inadvertently create an incentive for sellers not to report genuine credit histories for fear of reprisal.”

NACM has opposed HB 2198 since shortly after its introduction in the Virginia House of Delegates and will be in attendance at the Small Business Commission’s meeting on June 26 at 2:00pm EST. The full text of the bill can be found here. If you’re a credit professional in Virginia and want to learn more about how you can help defeat HB 2198, please contact Jacob Barron, CICP at jakeb@nacm.orgor by calling 410-740-5560.

Courtesy of Jacob Barron, CICP, NACM staff writer (National Association of Credit Management)

BIIA Comment:  The G20, supported by the World Bank, have launched a ‘financial inclusion’ initiative which is to eliminate information asymmetries (lack of information on SMEs).  Current information asymmetries are the cause for the lack of access to finance for SMEs, thus the Virginian initiative is going in the opposite direction.