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Risk Management Blog

UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

Tired of reverse UCC searches exposing your customer list?


Have you noticed a wave of calls from your customers to renegotiate the terms of their security agreement? Does it strike you as odd that so many are calling you all at once?

Perhaps it’s not odd at all but instead an indication that a competitor has obtained a copy of your customer list and is reaching out directly to each and every one of your clients on it.

“No way!” you might say. “How did that happen?”

Well, it’s easier than you might think. Every time a secured party perfects a security interest by filing a financing statement, one result of that filing is to reveal a secured party’s debtor, its customer, in the public record. We all understand the reasoning behind this process and the intentions of the Uniform Commercial Code with regards to perfecting a security interest, and it has nothing to do with exposing a secured party’s customer list to its competitors!

However that’s exactly what occurs and how a specific use of the public record has evolved.

Just like one can search a Secretary of State index by debtor name to determine if a potential customer has any current obligations and how those obligations are collateralized, one can also search the SOS index by secured party.

And what does a secured party search reveal? It reveals the debtors of a secured party within the index searched—a secured party’s customer list.

If this is happening to your firm, perhaps it’s time to consider a Secured Party Representative service. This service allows secured parties to perfect their security interests as before BUT with one important difference: the secured party’s name is no longer listed on the financing statement. So, when a competitor runs a secured party search on your firm’s name, your customer list is protected.

Interested to learn more? Click here to see if you have a need for our secured party representative service.




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