One would be hard-pressed to overstate the importance of a name in the business world. The name of a business is its identity. Many names become so valued, or are so valued by the owner, that they are trademarked so nobody else can benefit from the name. In my profession, getting the names of the parties to a lawsuit correct seems basic but is vital to the success of a given case. Similarly, ensuring that your company gets a customer’s name correct can be the difference in whether your company gets paid for whatever service or good it provides.
There are several situations that immediately come to mind when considering potential areas where a wrong name can harm a business. Specifically, common problem areas include credit applications and personal guaranties, purchase orders and invoices, and various business contracts. Often times, a customer may not know its precise corporate name, whether the company is a corporation or limited liability company, or if the customer is an individual, the customer may not provide his or her full name. Keeping these issues in mind when entering into contracts and setting up new accounts can help immensely when it comes time to collect a debt or enforce a contract.
At this year’s Hot Legal Topics seminar, the importance of names was discussed in the context of the Uniform Commercial Code and the recent revisions to Article 9. (Article 9 of the UCC governs secured transactions, where the seller takes an interest in collateral to secure payment for goods sold on credit.) There was a good discussion among the attendees regarding their companies’ procedures for taking on new credit customers and ensuring the customer name is accurate and verified. Some businesses require photo identification, while others do not.
However your business decides to confirm the identity of new customers or the identity of people and companies with whom you do business, it may help to consider the following:
- Getting a photocopy of a photo ID is acceptable, but it is important to safeguard all of a customer’s personal information. Be careful when storing copies of identifying information, social security numbers and data. Be sure to follow your company’s written identity theft policies.
- Make sure the customer provides you with his or her most recent valid identification.
- Require the customer to provide his or her full name as well as any other name he or she has ever used, including nicknames.
- Always check with the Secretary of State to confirm the precise identity of any corporate entity.
- Check with the customer to determine whether any trade names or “dbas” are used.
These tips surely will not solve every problem, but should help with the proper identification of new customers.
We have handled cases where the name of a debtor was, for one reason or another, incorrect. Fortunately, this is not always completely detrimental to the case, and often there are remedial measures that can be taken to resolve these issues. In addition, many of these problems can be resolved before they become problems by communicating with the customer or other party to a contract, then using the resources available to you to confirm the information provided.
At Vann Attorneys, we strive to be careful in accurately asserting claims on behalf of our clients and to be creative in resolving problems that arise at various points during the litigation process. We also enjoy assisting clients at the outset with business planning, contract drafting and review, and even helping clients find debtors, identify them and find out whether they own assets. If you need help confirming a new customer’s name, accessing the Secretary of State’s corporations database, or checking any other information provided by a potential customer, vendor or partner, it would be our pleasure to serve you.