Legal Guidelines — PICE: Printing Industry Credit Executives

Printing Industry Credit Executives, Inc.
Legal Guidelines Governing the Exchange of Credit Information

The exchange of credit information is a valuable and legitimate function of a trade or professional association. However, this activity can result in significant legal liability for both the association and its members if the service is not operated in a manner consistent with governing law. In order to avoid these problems, members should at all times adhere to the exchange guidelines and be aware of the underlying antitrust and tort laws.

Antitrust Implications
The antitrust laws were designed to promote free competition in business and to prevent members of an industry from acting together to set prices or otherwise restrain trade. Since credit is viewed as an element of price, any agreement to restrict the terms and conditions under which credit is extended can be seen as an interference with price and can constitute an antitrust violation.

The danger inherent in exchanging credit information is that the participants as a group can refuse to deal with parties whose accounts are delinquent or can take collective actions which standardize the terms and conditions under which credit will be extended. An agreement among members can be implied from discussions or threats made by group members concerning future plans for dealing with delinquent accounts. For these reasons, information exchanged must be limited to past experiences rather than to future plans, and no comments or suggestions should be made regarding setting credit terms or policies. Each member should exercise independent judgment in acting upon the information received from the exchange.

Defamation
Defamation is the cause of action which provides damages for false statements which cast aspersions on ones' reputation or character. Statements which impute a failure to pay debts, adverse credit character or an otherwise unfavorable financial condition can be considered defamatory.

There are two defenses to this type of lawsuit: truth and privilege. Truth is an absolute defense to a defamation charge. If the information is accurate, then it is not considered defamatory.

The second defense is the one of qualified privilege. In most jurisdictions, credit reporting agencies and their members are protected when communicating to those with a legitimate business interest in the credit information exchanged. This privilege is based on the legitimate business need for credit reports and is conditioned upon the good faith of the credit reporting agency in making the report. In order to qualify for the privilege, the report must have been furnished only to those with a business interest in its contents and can not be circulated with known inaccuracies.

In order to avoid allegations of defamation, all exchanges or reports should be limited to fact and not contain the opinions of the person making the report. Secondly, the information must be treated as confidential and not divulged to any customer, sales personnel or person outside of your organization.

If you have any questions regarding the proper format for exchanging credit information, please contact either Pat Rydzik at credit headquarters: 212-964-8600 or Jim Anderson, PICE legal counsel: 202-296-580 x307.

PICE Guidelines for Exchanging Credit Information

As a PICE member, you are part of an important credit fraternity. The open and candid exchange of credit information is the heart of that fraternity.

PICE credit experience information is exchanged in three areas: Online through the picecredit.org Web site, at the account discussion session of our semiannual meetings, and on a one to one basis via telephone, mail or faxed credit inquiries.

Here are the PICE guidelines covering those exchanges:

Online: Your prompt response to member inquiries through picecredit.org is a condition of your membership, and failure to participate may result in expulsion. Members are urged to log in at least twice a week -- preferably daily -- to insure the timely flow of information.

Account Discussion Sessions: The verbal interchange sessions are an important aspect of the semiannual meetings, and members are urged to attend. To participate in these discussions, members are asked to provide not only their ledger experience, but any additional or background information which may be helpful to other members.

Member-to-Member Credit Inquiries: You are requested to treat a fellow member's credit inquiry as you'd like your own inquiry to be handled: promptly and thoroughly. It is suggested that the response be made by the same medium as the inquiry, whether through picecredit.org, by phone, mail, or fax. Most members extend special courtesy to fellow members, and even if your company's normal policy requires written inquiries and replies, a phone response is greatly appreciated.

The reporting of credit experiences is closely monitored by credit headquarters and PICE's legal council, to insure it complies with legal guidelines. Through whatever medium, it must meet the following criteria:

	it must be confined to fact, not opinion;
	it must pertain to events which have already transpired, rather than any future plans regarding the account;
	no suggestions or recommendations may be made;
	and there may be no discussion relating to pricing, directly or indirectly.

All information generated through PICE, by whatever means, is to be treated as strictly confidential, not to be divulged to customer, to sales personnel or to any other unauthorized parties within or outside your organization. This includes revealing the name of the member requesting your experience with an account.

You will find your fellow PICE members helpful and courteous -- as you are expected to be. If you encounter any difficulties in the exchange of information, please call credit headquarters to discuss the situation. Your PICE membership will provide you with a tremendous amount of valuable information, virtually unavailable elsewhere, and you are urged to take advantage of the facilities available to you.