Legal Question in Business Law in California
Checking Credit Applications
As a manufacturer we need to check credit applications before shipping product to a retailer .In the Gift Industry it is common practice for a retailer to submitt a credit sheet to the manufacturer which lists the companies they are currently doing business with. The manufacturer can then contact these companies for credit info. Our company feels that they cannot contact these credit references (supplied by the retailer himself) without a signed credit application form from our company with the retailers signature giving us permission to check the credit references. In the Gift Industry it is an implied permission to check references when the retailer supplies the information himself on his letter head, giving his bank references, acct. #, contact name etc. along with at least 3 credit references of other manufacturers whom he is currently doing business with; supplying Company name, address, acct #, contac name etc. Question: must we as the manufacturer still obtail the retailers signature on our credit sheet or can we by law go ahead and check the supplied references?
2 Answers from Attorneys
Re: Checking Credit Applications
the law does not require that you get a signature
Ken Koury
Kenneth P. Koury, Esq.
5807 Topanga Cyn Blvd., Suite G-201
Re: Checking Credit Applications
Review Civil Code Sections 1785.1 and following. Section 1785.11(b)(1) provides a
"safe harbor" for a credit reporting agency when the consumer provides authorization. While
that section does not likely apply to your situation (Civil Code Sections 1785.41, 1785.42(a)), in light
of the potential penalties and lawsuits under both state and federal law, many companies will
insist on signed authorization to protect them. Revise your form to include authorization.
Jed Somit
Jed Somit, Attorney at Law
1440 Broadway - Suite 910
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