Have You Been Overcharged?

Two years ago (July 2000), WS&T's Ivy Schmerken broke a story detailing Bridge Information Services' financial woes and suggested that if the market-data provider did not get the proper funding it might end up in bankruptcy. In subsequent stories, WS&T's Cristina McEachern revealed Bridge's billing system played a central role in its troubled finances. Bridge was sending out inaccurate bills and clients just weren't paying them. Bridge eventually ended up filing bankruptcy and the company was subsequently broken up and sold to two competitors - Reuters and SunGard. Although there were many other issues that compounded Bridge's problems - including its rapid-acquisition strategy - it brings to light that inaccurately billing and collecting on services or products can severely damage a company.

As our cover story illustrates, a market-data powerhouse, Bloomberg, is finding itself facing a similar conundrum. Although the nature and scope of the two vendors' problems appear to be quite different, as the situation is not threatening to Bloomberg's viability, the focal point of both problems is the companies' billing procedures. Bloomberg has reportedly been overcharging customers for sales and use taxes on information services in as many as 40 states. The company has not profited from the faulty procedures, as it appears to have passed the taxes collected on to the appropriate state-tax authorities.

This is what makes the problem so difficult to rectify - Bloomberg has already given the collected taxes to the states and can't simply give the money back to its customers without seriously impacting its bottom line.

Although WS&T ran all of its information by a Bloomberg spokeswoman, she declined to comment, other than providing the statement that appears in the story expressing that Bloomberg is working with its customers to resolve these issues. However, because of the statute of limitations, the vendor might not be able to recoup all tax dollars that customers have overpaid.

It is interesting that even though Bloomberg admits it has known about the billing problem - public records show the company has been aware of it for at least two years - it appears to have only changed its billing procedures in Massachusetts. Although WS&T assumes that Bloomberg is trying to figure out a way to resolve the problem in other applicable states, we wonder why Bloomberg has taken so long to address the issue? Is Bloomberg's billing system that difficult to update? Is it so difficult to customize billing systems to reflect state-specific tax laws?

More importantly, in this economy, if Bloomberg has the opportunity to offer some customers a reduction in rates (equal to that of their state's sales tax) - why hasn't it jumped at the chance? The biggest questions we have for Bloomberg, on which it would not comment, is how much, in total, has it overcharged its customers, and what does it intend to do for them now? We'll be following the story and will share what we uncover.

Kerry Massaro
Editor-in-Chief
[email protected]