Hi folks,

I wish to start a company much like any credit rating company. This company would collect detailed information from various retailers regarding their customers "in-store" credit activities to establish a rating for individuals which would then be available to other retailers in order to assist them in making a judgement on whether to give credit when approached by a customer with a bad "rating" in this system.

The information itself would not be available to others, only a "rating" based on the information acquired by the credit rating system, so something like "Rating 1, 2 & 3" like we have for insurance. Essentially we are not releasing any personal information, only an opinion of that informtaion, which I'm sure is not crossing any lines, but if anyone knows of any that it is crossing, I'd like to know about it.

My question is, how do we 'legally' handle notifying current customers that their information will be entered into this database. We would assume that sending them a letter explaining that their information will be used would suffice, also giving them the option to close the account if they do not wish for their information to be used. Mostly only those with a bad credit rating will have anything to be concerned about. Those with a good or nuetral rating wouldn't even be entered into the system.

Thanks for your time.

P.

Hello P.

There are three huge credit bureaus who do the same thing. They have EVERYBOY in the system. That's why some retailers pay them money.

However, if your database isn't going to be very complete, why would any business do business with you instead of the big guys?

That's just for starters. You're going to get sued a lot... I mean a LOT. You might win, but you're going to require a HUGE legal fund...

Now, to your question. In the stores you have a contract with, have them include a little thing in the contract their customers signs that says they will be collecting data and using it in the way you are suggesting. Then you don't have to send 'em anything...

Look, I'm all for starting a business... But, you'll have to show me why you're going to be better, faster, cheaper than the big guys.

excon

I agree with excon. Even more, I don't see why anyone would contract with you. So, my suggestion to you is to first develop your business plan. Then contact potential customers and see if you can get enough of them interested to make this fly. Get then to sign contracts with you that would be come effective only if you get the plan off the ground. Otherwise I think you will lose a lot of money.

Ok, thanks guys. Both valid queries about my idea. So let me answer them.

The industry I am aiming for doesn't yet have a credit reference system, and it can't use any data from the "big guys" systems because nobody has been putting stuff in there for them. Basically they don't do any of that because none of them as individuals feel it is worth the effort. Also, a bad "credit rating" say for not paying your car loan, or credit card would not normally stop you from getting an account at a small'ish retail outlet, they pretty much just take you as a new customer and they don't check you.

Sorry I can't/won't reveal the industry, because that would pretty much just give it all away and you would all go "OMG that's BRILLIANT! Why didn't I think of that"... Hard to believe, but true. The friends that I have in the industry have told me that I would be in great demand if I had this system. So I'm keeping it to myself for now.

So separately they are small, but together they are huge. The debt to this industry currently stands at about $23million, and that is just in my home state. Nationally that works out to just over the $1billion mark.

The friends I mentioned, who work in the industry, know that people have tried this before and failed due to these privacy issues. First and foremost; competetitors not wanting to share the information for risk of losing even a "bad customer", sound silly? I thought so too. But as it stands nobody is helping this industry. This is why I'm looking for a way around the privacy issue.

As for writing this clause into "future applications", that goes without saying... at least that's what I thought. The fact remains that current customers who have defaulted must be notified that we are going to use their information in such a way that pretty soon their debt is going to stop them screwing over the next shop they walk into. They will be forced to back-track and cough up the doug ;) This is why the retailers will want to contract with me... because it will start pulling in all their old debtors and making them pay. Leaving town will no longer be the way to avoid paying.

Ok, seems you have researched this. I find it hard to imagine an industry that can't use the big three, but you seem to have found one.

I still say you need to line up customers FIRST. Setting up a database like this will involve a significant investment in people and equipment. If you don't have a pledge of income up front you will not get any investors. If you risk your own money you may be setting yourself up for a loss.

Hello again, pain:

Be aware that ScottGem wrote a book on databases... I ain't wrote a book on nuthin...

excon

Hi guys,

Thanks again for both speedy responses, and taking me seriously. Yes Scott, I've researched ;) Glad you noticed, many people wouldn't. I got this idea when I saw a very "by-the-way" article in the news paper a couple of years ago. This article pointed out how many businesses were owed many small amounts of money. Obviously they wouldn't service such clients again until the debt was paid, but the client generally moves on, never paying the debt. The current rating of these debts is very much a "is it worth it" scale, and if so, it is handed to a debt collector to see if they are willing to track it down.

More expense and time, since a debt collector is going to take up to half. Once again lowering the interest in chasing these debtors. With my system there is nobody running all over the country-side looking for the debtors, they just get notified the next time they ask for credit such as this. Then of course it is up to the next retailer if they wish to give them credit - against the recommendation of my system, but that's their call. Still, the customer would be notified, and they may even wish to clear up the issue, even if it doesn't stop them getting credit at that particular store, ie: they are honest, and have a conscience. This is where the small ones add up. My system chases everyone, not just the big fish. So it would pay for itself in no time.

Since I saw the article I've been thinking up the kind of system that would best suit the task. How to implement it for my clients, how to have them update the system and of course how to query it for the informtaion it holds. Lately I've been playing with the whole web development side of it. Learned a bit about PHP SQL driven sites. The PHP has been a steep learning curve, the SQL is child's play, and the HTML is a piece of... well you know.

So my question still stands :s How do I best handle notifying the current customers that they will be in this database? Would a letter to their 'last known address' suffice to cover my you know what.. The Privacy Acts says:

2.2 If an organisation uses or discloses personal information under paragraph
2.1(h), it must make a written note of the use or disclosure.

Obviously their 'last known address' is all we have, it's all we can work with.

There are other clauses in the act that relate to my query, but I can't find them right now and I'm in a hurry :s So I'll be off once again. I hope someone can shed more light on this for me before I go out and pay a Law professional for advice.

Thanks guys.

P.

Quote:

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Originally Posted by painfull

Hi guys,

Thanks again for both speedy responses, and taking me seriously. Yes Scott, I've researched ;) Glad you noticed, many people wouldn't. I got this idea when I saw a very "by-the-way" article in the news paper a couple of years ago. This article pointed out how many businesses were owed many small amounts of money. Obviously they wouldn't service such clients again until the debt was paid, but the client generally moves on, never paying the debt. The current rating of these debts is very much a "is it worth it" scale, and if so, it is handed to a debt collector to see if they are willing to track it down.

More expense and time, since a debt collector is going to take up to half. Once again lowering the interest in chasing these debtors. With my system there is nobody running all over the country-side looking for the debtors, they just get notified the next time they ask for credit such as this. Then of course it is up to the next retailer if they wish to give them credit - against the recommendation of my system, but that's their call. Still, the customer would be notified, and they may even wish to clear up the issue, even if it doesn't stop them getting credit at that particular store, ie: they are honest, and have a conscience. This is where the small ones add up. My system chases everyone, not just the big fish. So it would pay for itself in no time.

Since I saw the article I've been thinking up the kind of system that would best suit the task. How to impliment it for my clients, how to have them update the system and of course how to query it for the informtaion it holds. Lately I've been playing with the whole web developement side of it. Learned a bit about PHP SQL driven sites. The PHP has been a steep learning curve, the SQL is childs play, and the HTML is a piece of.... well you know.

So my question still stands :s How do I best handle notifying the current customers that they will be in this database? Would a letter to their 'last known address' suffice to cover my you know what...? The Privacy Acts says:

2.2 If an organisation uses or discloses personal information under paragraph
2.1(h), it must make a written note of the use or disclosure.

Obviously their 'last known address' is all we have, it's all we can work with.

There are other clauses in the act that relate to my query, but I can't find them right now and I'm in a hurry :s So I'll be off once again. I hope someone can shed more light on this for me before I go out and pay a Law professional for advice.

Thanks guys.

P.

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Here's my concern - this is a big endeavor. You've researched it, you know your industry, it's a winner.

But you are getting legal info on a public message board - I think it's time for an Attorney.

You've thought everything else through, why not get some sound legal advice, guaranteed and paid for?

Hi Judy,

Yes, that's what I was planning on doing if I couldn't prompt a resounding "oh yeh, you must do this:"... out of a few knowledgeable people out there in cyberspace :s

I was just hoping to at least get on the right track before paying someone a good swag of money. I'm not an entrepreneur yet ;) I'm just a guy with an idea. Entrepreneurs have more money than ideas, and they just pay people to do the things that they think up... I on the other hand am trying to do this myself on a simple mans income :s At least to the point at which I have a product that starts catching some interest.

Who knows, maybe someone will buy the whole idea from me, maybe I'll just get clients singing up, maybe even investors willing to jump on my wagon. Until then I have to work on a shoe-string unfortunately.

So thank you. Advice noted.

P.

Quote:

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Originally Posted by painfull

Hi Judy,

Yes, that's what I was planning on doing if I couldn't prompt a resounding "oh yeh, you must do this:"... out of a few knowledgeable people out there in cyberspace :s

I was just hoping to at least get on the right track before paying someone a good swag of money. I'm not an entrepreneur yet ;) I'm just a guy with an idea. Entrepreneurs have more money than ideas, and they just pay people to do the things that they think up... I on the other hand am trying to do this myself on a simple mans income :s At least to the point at which I have a product that starts catching some interest.

Who knows, maybe someone will buy the whole idea from me, maybe I'll just get clients singing up, maybe even investors willing to jump on my wagon. Until then I have to work on a shoe-string unfortunately.

So thank you. Advice noted.

P.

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And just be careful you are protecting your idea before somebody takes a closer look, thinks they "have it" and runs off with your brainchild.