Do predictive scores violate your privacy?
By Kelly Dilworth
It's going to provide you with offers that appeal to you, that are relevant to you.
|-- Patrick Dolan
Interactive Advertising Bureau
"It reveals a lot about you," says Dixon. "I don't think people understand just how revealing our life patterns are."
Other factors that may be part of this predictive analysis include your ZIP code, your level of education, your income and the kind of dwelling you live in. "It becomes really, really easy for people to make a lot of predictions and models based on that data," Dixon says.
Predictions made about you
Such predictions include:
voice privacy concerns
Marketers say alternative scores allow companies to create personalized experiences and deliver offers that consumers actually want.
"It's going to provide you with offers that appeal to you, that are relevant to you," says Dolan. "The way I look at it, anything that's not targeted to you is spam."
Privacy experts are not convinced the customized offers are universally beneficial, or worth the privacy trade-off. "When you are on the Internet, you are being followed around and tracked by dozens, if not hundreds of companies," says Ed Mierzwinski, consumer program director at the Public Interest Research Group.
Some companies use your real-time browsing history to generate predictive scores. Essentially "they are creating financial profiles that are parallel to your credit report," says Mierzwinski.
If a lender uses alternative scores to identify potential borrowers, "You are going to see a different credit card offer than I am if your score is different from my score," he says.
for public consumption
Curious about your alternative scores and how you stack up? You are out of luck.
Unlike traditional credit scores, predictive scores used for marketing purposes, rather than for determining borrower eligibility, do not fall within the scope of the Fair Credit Reporting Act. Consumer reporting companies regulated by the FCRA must provide you with a free annual copy of your consumer report if you request it. Or, they must provide you with a free copy if the information in the report was used against you. The law also provides a mechanism for consumers to challenge inaccurate data held by the companies.
Companies that generate alternative scores do not have to disclose what they used to calculate your score. They do not have to reveal what your score is -- or even that it exists.
You don't have the right to stop them from sharing it. You don't have the real right to look at it. You don't have the right to change it and the law does not limit its use.
|-- Ed Mierzwinski
Public Interest Research Group
Consumer advocates criticize digital marketers and data brokers -- companies that collect and sell personal and financial information -- for their lack of transparency. "There are many, if not hundreds of consumer reporting companies that try to stay out of the limelight," says Persis Yu, a staff attorney at the National Consumer Law Center.
Some data brokers not regulated by the FCRA allow you to buy your information or request it for free in exchange for some of your personal information. But even that can be difficult.
Employees at the National Consumer Law Center, for example, tried pulling their information from five different data brokers -- Acxiom, eBureau, Intelius, Spokeo and ID Analytics -- for a March 2014 report on big-data accuracy and found the process to be challenging. The companies that do provide you with the information they are collecting often make you jump through hoops to get it, Yu says. Or they only show you a selection of the information they have pulled.
"Even the most sophisticated consumers probably aren't going to be able to get at that data," says Yu.
Many other alternative scores offer no mechanism to request the information that goes into the scores, or to request corrections of inaccurate information.
Your rights are limited in many ways, Mierzwinski says. "You don't have the right to stop them from sharing it," he says. "You don't have the real right to look at it. You don't have the right to change it and the law does not limit its use."
Consumer advocates also worry consumers could be unfairly discriminated against or persuaded to use products not in their financial interest. For example, if you have previously used a payday lender, you may see offers for similar financial products with high fees and APRs, rather than offers with attractive rates and rewards. "I think industry needs to do a lot more to make sure there aren't any predators out there going after people with low or high scores," says Dixon.
Some consumer advocates also worry that the information used to score consumers may not be very accurate. "One of the big problems with these scoring products is they're deriving scores from data that is somewhat suspect to begin with," says Paul Stephens, director of policy and advocacy at Privacy Rights Clearinghouse.
Data brokers, for example, may have incomplete or inaccurate information. "I checked myself and found that the information the data brokers have on me is so incredibly wrong that it would put me in a group that is not descriptive at all of where I should be," Stephens says.
Federal regulators are starting to look at alternative scores more closely. The Federal Trade Commission (FTC) held a workshop on alternative scoring in March and asked consumer advocates and industry analysts to comment on the practice.
The Interactive Advertising Bureau's Dolan says the marketing industry takes care to protect consumers' information.
"Privacy is incredibly important. It's important to marketers and important to consumers," he says. Marketers aren't interested in painting a bull's-eye on any individual, Dolan says. "A lot of this is machines talking to machines and it's not what you think it is," he says. "I would say, in my own experience, working in this world, trying to decipher all this data and trying to pinpoint any one particular person, there's no value in it."
That doesn't satisfy consumer advocates who worry consumers' privacy is being compromised by the data collection. "It's really important to understand the patterns we're all leaving behind," says Dixon. "Predictive analytics and predictive scoring are really the new future of data," she says.