Background Credit reporting agencies are a key player, helping facilitate modern commerce
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Transcript of Background Credit reporting agencies are a key player, helping facilitate modern commerce
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BackgroundCredit reporting agencies are a key player, helping facilitate modern commerce
Credit records help predict the “risk” of a transaction
Credit bureaus actively gather data about consumers and businesses … but make it difficult for the subjects of theirreports to review their own records
In the US, the Fair Credit Reporting Act regulatescredit bureaus
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Trust relationshipsBetween credit bureaus and their customers (credit reportusers)… not between bureaus and the subjects oftheir reports
Secret “scoring” algorithms don’t explain why aconsumer received a low score
Correction of erroneous data is difficult
Consumers have no control over the release of their personaldata to creditors
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Identity theft due to Social Security Numbers Fraud Assistance at Trans Union:
1992: 35,235 cases1997: 522,922 cases
Social Security Number misuse investigations:
1996: 3051997: 1,1531999: 39,000
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International Credit Rules / international reputations
EU has strict rules protecting individual credit historiesAlso enforces strict rules about notification
Only one of the “big three” bureaus is active in Europe
Foreigners find that perfect credit records in their homecountries don’t follow them to new places.Effectively, they start anew after every move.
“Either have a US citizen co-sign, or be a student at a goodcollege, and you will be allowed to get a bank account.Then you get an ATM card, then a check card, and finallyafter a few months of credit history you get your first creditcard with a limit of $300.
“After four years I finally have good credit limits and any card I might apply for. In a few more years I’ll be able toget a mortgage for a house.”
- International student
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Things you can do on the Internet Order a sandwich
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Things you can do on the Internet Send flowers
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Things you can do on the Internet Pay a bill
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Things you can do on the Internet Balance your checkbook
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Things you can do on the Internet Trade stocks
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Things you can do on the Internet Buy US Treasuries
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Something you can’t do on the Internet Manage your credit reputation
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Credit bureaus in the newsMar. 3: Financial services groups plan to fight tough newprivacy laws being considered in state legislatures.
Mar. 8: FTC orders Trans Union to stop selling consumerreports in the form of targeted marketing lists
Apr. 10: E-Loan allows consumers to see their “FICO”scores; Equifax cuts its data feed. E-Loan president:“Consumers have the perfect right to have their creditinformation and use it as they see fit.”
Apr. 10: Credit data vendors are fighting credit unions’attempts to improve privacy for their members.
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The current environment
FCRA restrictions
Stringent privacy rules in the EU
“Big three” continuing pursuit of heavily-regulatedconsumer-hostile activities and information sales
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Emerging Trends
Increase in small or one-time-only Internet transactions
Increase in small-scale international transactions
High awareness of privacy issues
Skyrocketing use of SSN for identity thefts
Development of XBRL (Extensible Business Reporting Language)
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A credit report is like a “permanent record” for adults
• You cannot change the contents of your record
• You must ask permission (and often pay) to review your record
• You have little control over who else sees it
Doesn’t that seem odd?
(say “YES”)
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What if you had some control over your “permanent record” ?
creditbinder
brings consumer controlto credit historiesand personal records
improves the qualityof information forall interested parties
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How does it work ? Credit gathering
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How does it work ? Infomediary queries
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How does it work ? Secure one-time identifiers
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How does it work ? Long-term identifiers
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Target audiences
Educated, affluent, privacy-aware new-economy consumers
Emerging industries - Internet and highly-wirednew economy companies
Emerging markets - the developing world, C2C microeconomies
International consumers and companies who need aglobal credit/reputation dossier
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Extensions
Medical records
Personal profiles you release to selected marketers
“Unlisted” e-mail addresses
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Consumer controlConsumer cooperation
Borderless credit reputationsSecurity from ID theft and abuse