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The subject of “bill shock” has been getting an increasing amount of coverage lately. On one side, the FCC and consumer groups are advocating new regulations mandating customer alerts and other information to help customers avoid unexpected monthly charges, or “bill shock.” On the other side, three wireless industry groups, CTIA, the Rural Cellular Association (RCA) and the Rural Telecommunications Group (RTG), have come out in opposition to the FCC’s proposed mandate. The consumer view According to Consumer Reports, bill shock is a common occurrence: One in five survey respondents reported receiving an unexpectedly high bill in the previous year, often for exceeding the plan's voice, text, or data limits… half of them were hit for at least $50, and one in five for more than $100. The industry view In comments to the FCC, the CTIA maintained that new mandates were not only unnecessary but costly, and that carriers already provided sufficient monitoring tools for customers. In addition, the CTIA argued that the FCC did not have the authority to impose such rules and that they would violate First Amendment protections: The FCC should refrain from initiating prescriptive rules that not only would likely cost carriers (and therefore consumers) tens, if not hundreds, of millions of dollars to put into practice, but that also would raise numerous legal issues, create substantial implementation challenges, and force companies to upgrade to a set of government standards instead of creatively competing in the provision of service to customers. A No-Win Situation? The issue puts carriers in an awkward position. Even if they prevail with the FCC and prevent the proposed mandates, they may still lose in terms of public relations with consumers. Connected Planet Blogger Susana Schwartz got to the heart of the matter with the question of who is ultimately responsible: the customer or the carrier? At what point is it too much responsibility to put on the carriers’ shoulders and at what point should people be held responsible for their choices? Regardless of the answer to such philosophical questions, there are the three key FCC proposals that wireless carriers need to be aware of as the issue moves forward. Three New Potential FCC Mandates   Over-the-Limit Alerts: The FCC’s proposed rules would require customer notification, such as voice or text alerts, when the customer approaches and reaches monthly limits that will result in overage charges.   Out-of-the-Country Alerts: The FCC’s proposed rules would require mobile providers to notify customers when they are about to incur international or other roaming charges that are not covered by their monthly plans, and if they will be charged at higher-than-normal rates.     Easy-to-Find Tools: The FCC’s proposed rules would require clear disclosure of any tools offered by mobile providers to set usage limits or review usage balances. The FCC is also asking for comment on whether all carriers should be required to offer the option of capping usage based on limits set by the consumer.   How will these proposals affect your business? Let us know your concerns. We’ll keep a close watch on this issue as it develops and keep you posted.

This is the third post in our series about bundling. In the previous two posts, I discussed 1) the many benefits of bundling services and 2) how to determine who might be a good candidate for bundled services. When it comes to maximizing upside and mitigating risk, of primary concern is knowing your customer’s payment history and creditworthiness. But once you’ve identified good candidates for bundled services, just what is it you should offer? An offer they can’t refuse As with most marketing practices, there is no exact formula for creating a successful bundled package. Some considerations include: Making sure the package is worth more than the sum of its parts. If it costs the same to buy each of the services separately, your customers might very well go shopping elsewhere for each individual service.   Creating a package that makes it easier to choose from various options. An overly complicated offer is more likely to drive customers away. On the other hand, an offer that simplifies your customer’s life is going to be more attractive.     Ensuring that the customer feels at least one product in the bundle is a “need” item. For example, many consumers require a landline for an alarm system, which makes the landline a “need item” for them. Linking an essential service or product (“need item”) to a luxury product/service (“nice to have”) adds value to the package and makes it more attractive to certain consumers. Because the package includes a need item, these consumers would think twice before skipping a payment.     Providing a few choices rather than a one-size-fits-all offer. Create several packages at different price points that include different options. To determine the most appropriate services to bundle, you need to drill down to find out what products are most appealing in a particular market. For instance, bundling might be more appealing in some higher income point populations as opposed to lower income areas.     Understanding a customer’s cash flow situation and accommodating for a certain degree of bill shock can go a long way toward creating bundled offers that customers actually respond to in a positive way.     Any questions? If you’re thinking about getting into the bundling game — or expanding on your current bundling strategy — you have a lot to consider beyond these three posts. If you have specific questions in the realm of bundling you would like to see addressed, please be sure to comment on this post.

Issues that could have a major impact on how telecommunications, cable and energy companies conduct business will soon be decided, as all 50 state legislatures go into session. It’s not every year that this happens, since some state legislatures only meet biannually.Two Big Issues to Watch: Breach Notification & Employment Screenings1) Breach NotificationNow that 46 states have a breach notification law on the books, lawmakers are looking at whether those standards should be expanded. So far, at least 12 state legislatures are considering proposals.At the heart of all breach notification laws is a set of conditions, or “triggers,” that have to occur before a company is required to send out a breach notification to consumers. For most states, the requirement is based on some level of harm for consumers as a result of the breach. Some states have begun to look at those triggers and conclude that all types of breach, no matter the risk, should be report to consumers. Additionally, included in some pieces of legislation is a requirement to report all breaches, no matter the size, to the state attorney general. The concern of many in the private sector is that attorney general notification opens up new liabilities for companies, as many states will post a list of breaches on a government website, even if there is no harm to a consumer.States are also examining the types of information that should be provided to consumers as a result of a breach. For example, should consumers be notified of information such as the time, location and type of information exposed during a breached. The challenge is that all of this information would be made public, possibly creating additional risk.2) Employment ScreeningsWith a weakened economy, state legislators are looking for ways to help the unemployed find new work. As a result, lawmakers are looking into placing new restrictions on the ability of employers to conduct credit checks on prospective employees. The intention driving the discussion is to help consumers who might be negatively affected by poor credit history out of concern that the information will result in an individual’s ability to be hired.Currently, only four states have statutes that regulate an employer’s use credit history data. This year, at least fourteen states are considering their own restrictions.Why Check a Job Applicant’s Credit?Misconceptions about the content of credit reports used for employment purposes have encouraged the proposals. The result, however, of such legislation would be to remove a valuable tool from employers to evaluate and compare different candidates under consideration for a job.Since employers are held responsible for the actions of their employees, it’s only natural they take steps to protect themselves. Such measures are already regulated by the Fair Credit Reporting Act. Some legislatures may also soon expand those restrictions. The result of using credit is not fewer employees being hired, but hiring the best candidates for the job.What’s Next? Stay TunedAs most state legislatures are composed of part-time lawmakers, many will be in session only through April, but these trends will likely impact discussions at the national level. For instance, the Equal Employment Opportunity Commission has already held hearings to examine employers’ use of credit checks. And Congress is contemplating a national breach law.We’ll be monitoring future regulatory developments, so check back frequently or subscribe to keep up on these issues and others affecting your industry.

Heads up! Change is coming that could have a far-reaching impact on risk-based pricing and the way telecommunications, cable and energy companies do business. Get ready for June Effective June 25, 2011, The Social Security Administration (SSA) will be changing the way Social Security Numbers (SSNs) are issued. The change is known as “randomization.” Why Randomization? “Randomization” is simply the random assignment of SSNs. At some point, the nine-digit SSN will be exhausted. The SSA believes this new method will protect the integrity of the SSN and extend the available pool of nine-digit numbers in each state, as well as nationwide. Psst… Don’t read this out loud, but… In reality, the country has probably already run out of unique nine-digit numbers after more than 75 years of Social Security. So the communications industry is largely skeptical about the ability of the SSA to effectively manage randomization. Concerning Risk-Based Pricing Randomization will affect the way telcos handle risk-based pricing, including customers of Experian’s Connect Check. Developed specifically for the communications and energy industries, Connect Check helps businesses avoid fraud, reduce financial loss, maximize customer value and identify prior customers. The solution verifies an applicant’s identity instantly, pulls a credit report, and determines prior relationships and related bad debt, limiting risk and maximizing profit potential. More details will follow as the SSA implements its new policies. To prepare, talk to your Experian rep for more insight into how randomization will affect risk-based pricing and compliance for your business.

In a previous post (“The Benefits of Bundling”), I discussed some of the advantages that can be derived from bundling services, including: • Enhanced customer loyalty • Simplified customer experience • Time and money savings • The ability to penetrate new markets • Easier and less risky upselling path for larger share of wallet Easier said than done While the benefits may be many, making bundling work for you is no simple task. Formulating a plan to maximize upside and mitigate risk starts with a deep understanding of your customer’s ability to pay a bundled services bill. I recommend the following: Leverage your current relationship (or your partner’s relationship) with the customer to understand past payment behavior. A long history of on-time payments is obviously a good sign, but it’s not the only attribute to consider. Look at the customer’s credit score to get an idea of creditworthiness. By setting certain thresholds, you can amass a list of customers that would likely respond positively to a bundled offer and also be able to pay for it. Incorporate broader data sets to improve business intelligence and obtain a more accurate assessment of each customer’s creditworthiness. Overlaying certain attributes on top of a base credit score can help you make more effective decisions about which customers to approach with a bundled offer. In fact, even a questionable credit group might receive a positive lift by applying the right attributers (see below). Alternatively you might be able to uncover the few members of an otherwise undesirable group that have the right attributes but that might otherwise have slipped under the radar. Ultimately your goal is to determine the point at which a customer is most profitable to you versus the point at which paying the bundled bill becomes a problem. But that’s not the end of the story. Just because a customer can pay for a bundled offer doesn’t mean he or she will. Once you’ve determined the right customers to approach, your next task is to determine how to create the most appropriate mix of services to bundle, a topic that will be covered in an upcoming post. In the meantime, if there are specific topics in the realm of bundling you would like to see addressed, please be sure to comment on this post.

Consumer information is at the center of our economy. It connects us to the right products and services, helps companies innovate and expand, and allows consumers to make smarter choices throughout their lives. While the use of consumer information is becoming more important to businesses and consumers, there is a growing concern among policy makers that the laws governing consumer privacy are not keeping up. Over the last year, the FTC and the Department of Commerce have been studying these issues and each released preliminary reports looking at the changing privacy landscape. Although much of the discussion has focused on online data, the reports take a broader look at the privacy practices of organizations both online and offline, offering a number of recommendations that challenge policy makers and companies to better protect consumer information. As regulatory agencies and Congress continue to examine business practices around consumer privacy, I thought it might be helpful to take a look at recent comments Experian filed with the FTC and highlight a few areas that will be important for policy makers to consider going forward. A flexible and adaptive regulatory system is essential to an innovative economy Consumer privacy expectations are continuing to evolve and, as a result, standards must not be rigid. Along with existing regulations, new challenges should be dealt with robust and evolving self-regulation – not new laws – to ensure consumers are protected now and in the future. Consumer privacy should be viewed from multiple perspectives The recent debate around commercial information sharing has centered on consumer privacy; however there are other viewpoints that should be considered. For example, how are businesses using information in a responsible manner to innovate and increase productivity or how does the overall economy benefit from consumer information that makes us more competitive in a global marketplace.   Incorporating consumer privacy into all aspects of a business is a powerful consumer benefit The FTC report recommends a “privacy by design” framework – meaning that companies incorporate privacy into every aspect of their business operations. This framework could potentially evolve into a useful tool for companies to evaluate their privacy and data security policies. In the coming months, we’ll likely see a number of Congressional hearings as federal regulators craft a final privacy report. And in future posts, we’ll explore how the new proposals impact your business.  

Next week (Feb 22-23), several Experian credit and collections experts will have the privilege of sharing their expertise with TRMA conference goers. Leading up to this year’s Conference, I thought I’d briefly introduce you to each of these speakers and provide a sneak preview of his or her presentation. Session: TRMA Learning Lab (Tuesday, 2/22/11, 8 a.m. to 12 p.m.) Topic: The SimTel Business Game for Account Management Experian Presenter: Jim Nowell Business Training Consultant Follow up Session (Game results): Wednesday, 2/23/11, 10:45 a.m. to 11:15 a.m. ----- KM: Today, we welcome Experian’s Jim Nowell. How are you doing, Jim? JN: I’m doing great, Kathy. Really looking forward to sharing the SimTel Business Game with folks at TRMA. KM: Two sessions, right? JN: Yes, the Game is on Tuesday. We present the results on Wednesday. KM: Before we hear about the Game, can you briefly describe what you do at Experian? JN: Sure, I’m a Business Training Consultant. My job is to train our clients’ analysts in setting strategies using Strategy Management systems. It’s not so much about how to use the software but what to look for and what to do (or not do) to address the problems. I do this through a 2½-day “SimRisk” Business Game courses. KM: 2½-days? I thought this was 4 hours! JN:The Business Game that we’ll run at TRMA is actually an abbreviated version of our regular analyst training course. Of course, in the full version there’s more time to spend discussing teams’ proposed strategies and possible outcomes. KM: Tell us a little bit about the SimTel Game itself, including why you do it and what players come away with? JN: The SimTel Business Game for Account Management is a realistic risk simulation exercise in which Risk Managers work in small teams to solve credit problems for a fictitious Telco portfolio. We offer it at conferences so people can show off their “credit chops,” while learning new ways to refine corporate credit strategy. KM: That sounds fun, is SimTel new? JN: We’ve actually been running the Originations version of SimTel for a few years now, but there was a lot of demand for an Account Management version, so we developed this last year. When we tested it out in the UK, players really got into it. KM: So how does the game work? JN: Before the session, participants receive a set of simulated reports showing the portfolio performance over the last 24 months. Using Strategy Management Software, they get three opportunities to amend their strategies for: Collections, Credit Limit Assignment and the “Ongoing Bundle.” After each set of changes, the portfolio is run forward by 3 months and a new set of reports is created to reflect the updated results.   KM: Why do people like the SimTel game so much? JN: First of all, it’s fun! And, it provides a great opportunity to work side-by-side with industry peers to solve a realistic business-credit problem. There’s also the thrill of competition. Even though the data is simulated, people approach it as if it were real. During the session, players gain a real appreciation for how changes to one element of a strategy, say credit limit assignment, directly affects other areas, collections for example. KM: So true. What happens on Wednesday? JN: That’s when I’ll deliver the games results … and most importantly, the winners! We finish up by summarizing how people can use the Strategy Management Software to develop their own winning strategies, and with a quick Q&A, so it should be fun. KM: Sound great, Jim, I can’t wait. JN: Thanks, Kathy. Hope to see you there. Stay in the know Follow Experian from the TRMA conference on Twitter (@experiancredit), and check this blog regularly to learn about the latest trends, tools and tips—including credit and collection best practices and emerging legislation.

By: Linda Haran Next week (Feb 22-23), several Experian credit and collections experts will have the privilege of sharing their expertise with TRMA conference goers. Leading up to this year’s Conference, I thought I’d briefly introduce you to each of these speakers and provide a sneak preview of his or her presentation. Session: Wednesday, February 23, 2011 (9:30 a.m. to 10:30 a.m.) Topic:  Economic Update: Historical linkages between credit conditions and the economy, and their impact on telecommunications. Experian Presenter: Linda Haran, Senior Director, Business Strategy and Marketing, Experian Decision Sciences ---- KM: I want to welcome Linda Haran, Senior Director, Business Strategy and Marketing at Experian. Good morning, Linda. LH: Good morning, Kathy. It’s nice to see you. KM: Thanks. Well, another TRMA conference is upon us. LH: Yes, we’ve attended a few, haven’t we? KM: Yes, we have!  It’s one of my favorite conferences, though. And in terms of the quality and breadth of information, this one looks very promising for providers. KM: Now, we know you’re presenting again this year, but before we hear about that, tell us a little bit about what you do at Experian. LH: Sure. I’m the Senior Director of Business Strategy and Marketing for Experian Decision Sciences. I work closely with marketing and product managers, and together we focus on a couple of key areas. First, is understanding market trends and how they might affect clients’ emerging and future needs. We spend a lot of time delving into companies’ business issues and helping them see how sound analysis and good data can make them more successful. Internally, I work with our North American Decision Sciences team to formulate new product and growth strategies. It’s a big job but we have a very dynamic and dedicated team, which makes it fun. KM: Well, you’re no stranger to financial services. LH: No, I’ve been in the industry for more than 15 years. Nine with Experian, including time as Director of Product Management and Senior Manager of Portfolio Strategy for the Consumer Information Solutions. KM: You definitely bring a “big picture” perspective. So what will attendees learn from you this year? LH: In the “Economic Update,” session I (and an industry counterpart) will review the historical linkages between credit conditions and the economy—and specifically, how they relate to telecommunications. KM: I believe you’ll also be talking about certain sectors, right? LH: Yes. We present an analysis of the mortgage and bankcard sectors, where delinquencies have actually turned the corner and now are trending downward. We’ll also cover the state of foreclosures, changes in consumer behaviors, and the impact of all that on telecommunication services. Finally, we get into the credit outlook—changes in lending standards, delinquency trends, things like that—and share what we see coming for telecoms in the next couple of years. KM: All that in an hour, wow! LH: Yes! It’s definitely a full session. Because we tie together the past, present and future. Fortunately, people like the material, so we spend a lot of time afterward talking and answering questions. KM: Should be great, Linda, looking forward to it. Thanks so much for your time. LH: You’re welcome. See you there. Stay in the know Follow Experian from the TRMA conference on Twitter (@experiancredit), and check this blog regularly to learn about the latest trends, tools and tips—including credit and collection best practices and emerging legislation.

By: Greg Carmean Next week (February 22-23), several Experian credit and collections experts will have the privilege of sharing their expertise with TRMA conference goers in Las Vegas. Leading up to this year’s Conference, I thought I’d briefly introduce you to each of these speakers and provide a sneak preview of his or her presentation. Session: Small Business Panel (Wednesday, 2/23/11 10:45 a.m. to 11:15 a.m.) Topic: Mitigating credit risk: Best practices throughout the account lifecycle Experian Panel Expert: Greg Carmean, Experian Program Manager, Small Business Credit Share ----- KM: I’m talking with Experian Program Manager, Greg Carmean. Hi, Greg. GC: Hi, Kathy. KM:  Greg, tell us a little bit about your work at Experian. GC: I’m a Program Manager on the Small Business Credit Share side. I work with small and medium sized companies, including telecom and cable companies, to reduce credit risk and get more value from their data. KM: Great, so what are your thoughts about this year’s TRMA conference? GC: From what I’ve seen, it’s shaping up to be a very worthwhile event for telecom and cable companies. KM: I agree, the presenter list looks especially strong this year. What’s your topic? GC: The title of my presentation is “Mitigating Risk: Best Practices throughout the Account Lifecycle.” KM: What will be the biggest takeaways for credit and collections professionals? GC: Well, as you know, there’s a recovery of sorts underway. But providers, especially the smaller ones, are still struggling to remain competitive. Credit risk is always a hot-button issue, so we’ll be presenting a number of risk-mitigation best practices and tools for account acquisition, account management and collections. KM: What information do you think your audience will find most useful? GC: We cover scoring solutions and emerging technologies, which companies always like. But I think people will really want to know more about linkage—and how leveraging information about both business and owner can further reduce credit risk. We’ll close with how bureau data and collectability scores help companies recover more unpaid debt. KM: Sounds like a lot of good information, Greg—things companies really need to know. GC: I think so. With the way delinquencies, slow pays and DBT were trending up in 2010, I think there’s something here for anyone who wants to reduce their risk. KM:  Looking forward to seeing you at the podium, thanks for your time. GC: Thanks, Kathy. Stay in the know Follow Experian from the TRMA conference on Twitter (@experiancredit), and check this blog regularly to learn about the latest trends, tools and tips—including credit and collection best practices and emerging legislation.

As a global leader in providing credit-decisioning information, analytical tools and marketing services to organizations and consumers, Experian is no stranger to telecommunications or to TRMA. In fact, the current TRMA home page reflects this connection, listing Experian as TRMA’s 2009 Best In Class Affiliate Award recipient and leader atop the Fall, 2010 Affiliate scorecard. Finding treasure in Vegas More importantly, however, the page reminds visitors that TRMA’s primary goal is “reducing fraud and uncollectibles in the telecom industry.” Toward that end, they’ve put together a dynamic, information-rich conference for February 22-23 entitled “Sailing towards Treasured Results.” This year, several Experian executives – including myself – will have the privilege of contributing knowledge and expertise to the proceedings. Get connected before, during and after TRMA In these days before the event, I’ll virtually introduce you to each of Experian’s TRMA speakers and give you the opportunity to learn more about them and their topics. During the conference, as time permits, some will be tweeting and blogging their thoughts, opinions and observations. They’ll analyze and unpack conference developments, and share their analysis with our followers and readers. Stop wondering, start following We expect a lot of actionable information from TRMA. So if you aren’t following us on Twitter (@experiancredit) or checking this site regularly, before, during or after the event would be the ideal time to start. You’ll gain a lot of insights from people who really understand telecom’s unique credit challenges and opportunities. And if you're attending TRMA, I certainly hope to see you there.

We’ve written a number of posts suggesting how telecom and cable providers can use reliable consumer credit data to improve acquisition, prospecting, retention and risk mitigation, but we haven’t yet covered collections.  So here is the first in what will probably be several collections-related entries. Please let us know what you think. What’s in your data mix? As you know, the ranks of “skips” or delinquent accounts have grown considerably over the past few years. This phenomenon has compelled many telecom and cable companies to reevaluate the quality and use of their skip tracing data. What they’ve discovered is that contact data alone—current address, previous addresses, land line and cell phone numbers—may not be enough to recover lost payments. Which brings us to the missing ingredient. Reliable consumer credit data Combining fresh contact data AND reliable consumer credit data enables you to recapture more funds from more delinquent accounts. Adding credit history to the mix broadens your view of consumers’ overall financial health, allowing you easily distinguish between those who can pay and those who can’t. What the data can reveal Assuming your consumer credit data comes from a reputable, knowledgeable source, you’ll be able to immediately learn a lot about your customers’ behaviors and circumstances, including: Attempts to open a new account while they’re still overdue with you Recently declared bankruptcies Once delinquent customers who now have the ability to pay Tying in “triggers” Some communications providers use collection tools called “triggers.” When tied to a consumer credit report, triggers alert you to new information, including cell or landline number, address, employer, or changes in financial status, such as when bankcard funds become newly available. Quality credit data + tools like triggers + a reliable data partner = a surefire recipe for collections success. Collections not your focus? Check out the post on “Using Data Intelligence to Reduce Churn, Build Loyalty and Keep the Right Customers.”

TRMA’s Spring Conference scheduled for February 22-23, 2011 As you probably already know, the mission of the Telecommunications Risk Management Association (TRMA) is to “drive positive change in order to reduce fraud and optimize risk for the benefit of the industry, individual members and paying customers.” As part of that mission, TRMA is committed to bringing together risk management professionals several times a year for information-sharing forums. The organization’s 2011 Spring Conference is scheduled for February 22-23, 2011 at the Treasure Island Hotel & Casino in Las Vegas. Experian representation at the TRMA Conference At Experian, we’re committed to investing in new technologies in order to offer our communications customers the most advanced fraud prevention and risk management tools. Being a part of TRMA helps us better understand how we can best respond to existing and emerging requirements to one of the key industries we serve. And it allows us to share what we see as up-and-coming trends as well as new developments in risk management. Experian Decision Analytics personnel are scheduled to present at TRMA’s 2011 Spring Conference, as follows: Jim Nowell, Business Consultant TRMA Learning Lab – The SimTel Business Game Tuesday, February 22, 8:00 a.m. – 12:00 p.m. Jim’s lively Learning Lab will have several small teams of risk managers working together to solve problems for a fictitious Telco portfolio. The results of the game will be delivered on Wednesday morning at 10:45 AM.   Linda Haran, Senior Director, Strategy and Marketing Economic Update Wednesday, February 23, 9:30 – 10:30 a.m.   Linda serves as one-half of this panel, reviewing the historical linkages between credit conditions and the economy with an emphasis on how they relate to telecommunications.   Greg Carmean, Program Manager, Small Business Credit Share Small Business Panel Wednesday, February 23, 11:15 a.m. – 12:15 p.m.   Greg serves as one-half of this panel, discussing best practices for small business risk assessment, such as employing a blend of consumer and commercial data to combat fraud.   Jeff Bernstein, Executive Strategic Consultant Leveraging Technology to Maximize Returns on Outsourced Collections Wednesday, February 23, 2:00 – 2:45 p.m.   Jeff serves as one-half of this panel, discussing ways to avoid the “perfect storm” of rising delinquency rates, lower liquidation and staff drowning in the tidal wave of bad debt. We hope to see you there More details on each of these presentations will follow this post in the coming week. We look forward to seeing you at TRMA’s Spring Conference. If you can’t attend (or even if you can), be sure to follow us on Twitter for live conference updates, and check back here for post-conference blog posts.

For companies that regularly extend credit, the need to establish an identity theft protection program is finally here. After almost two years of delay, the Red Flags Rule is now in force. For readers of the Experian Decision Analytics blog, the Rule has been a familiar topic since passage. If you want to skip ahead to find out what you need to know, we’ve made it easy by boiling it down to three main things. (You’ll find the “3 Things Telcos Should Know About the Rule” towards the end.) However, some background might be helpful to better understand the issues behind the delay. Discussion about Red Flags requirements first began when Congress passed the Fair and Accurate Credit Transactions Act in 2003, requiring the Federal Trade Commission to write and enforce the Rule as the nation’s consumer protection agency. The Red Flags Rule was actually enacted on Jan 1, 2008, but enforcement was delayed until December 31, 2010 to better clarify the terms of compliance and who had to follow them. Why the Red Flags Rule matters A “red flag” is something that signals possible identity theft, including any suspicious activity suggesting crooks might be using stolen information to establish service. The regulation now requires companies to develop a written “red flags program” to detect, prevent and minimize damage that could result from a security breach. Establishing a Red Flags program Companies that regularly extend credit or use consumer reports in connection with a credit transaction need to have a risk-based security program in place. The program must detail the process for detecting red flags, describe how to respond to prevent and mitigate identity theft, and spell out how to keep the program current.   Decision to delay: the definition of “creditor” At the center of the FTC’s decision to delay enforcement was a broad definition Congress gave to the term “creditor.” The Rule broadly captured a number of non-financial companies (many of them small businesses) that didn’t know whether it applied to them, and if they did, didn’t have time or expertise to establish proper procedures to comply. And failure to comply could lead to costly fines or civil actions. New Red Flags exemptions To resolve the issue, Congress approved legislation providing exemptions for businesses that provide goods or services and then accept payment later. The bill redefines the term “creditor” to apply only to businesses that advance funds to, or on behalf of a customer, based upon an obligation to repay. 3 things telcos should know about the Red Flags Rule: 1. Telcos are covered by the Rule For companies, like telcos, that obtain consumer reports, directly or indirectly, in connection with a credit transaction the requirement to comply hasn’t changed. In fact, under regulatory guidance, the FTC specifically lists telecommunications companies among those who need to comply. 2. Your company needs a written Red Flags program The FTC Rule requires that organizations identify and address the “red flags” that could indicate identity theft and update the program periodically. The program must address certain “covered accounts,” which includes a consumer account with frequent transactions or those that have a risk of identity theft.  An annual report must also be created for senior management or the board of directors.   3. How to comply is up to you The good news is that the Rule doesn't require any specific practice or procedures. Companies have the flexibility to tailor compliance programs to the nature of their business and the risks they face. The FTC will assess compliance based upon whether a company is taking “reasonable policies and procedures” to prevent identity theft.    

Like all companies seeking to generate new revenue, wireless providers continually strive to expand their creditworthy universe of applicants and prospects, while shrinking or eliminating risk. Compared with other industries, however, telecom tends to have a disproportionate number of no-hit and unscorable thin files—primarily young adults and immigrants, emerging consumers, and alternative-finance transactors. The main reason is that these individuals typically acquire cell phones well before credit cards, mortgages or other loan products, and thus, fly under the radar of traditional credit scoring. Micro-segmentation—a paradox with a payoff Experian has found that, despite the lack of documented credit history, these often-ignored segments contain many potentially profitable accounts. Narrowing your focus (through targeted attributes and micro-segmentation) can actually expand your universe of prospects, creating a whole new world of opportunity that enables you to: Grow your portfolio without increasing your risk Match new customers with the appropriate deposit and payment structure Build trust, loyalty and long-term value Many companies also integrate market data, dealer data or other internal records to refine micro-segmentation efforts. Others enlist credit-reporting agencies to help combine traditional and alternative data sets to predict future performance. One or both methods can yield highly favorable results. Using high-quality information from proven, reliable sources enables wireless companies to segment information in innovative and profitable ways. In fact, when providers successfully expand their creditworthy customer universe, high-quality data is usually the bright and shining star. To learn more, read a related post about the role of data quality in effective customer acquisitions.

The passage of the Telecommunications Act of 1996 increased competition in the telecom industry. These days, nearly every telecommunications company is offering, or considering offering, bundled services to attract new customers, increase retention of current customers, or both. Every time I turn around, there seems to be a new variety of bundled services. Quality, ease of use, and the right price points in a market, make these bundles very attractive to consumers. Most offers are directed at consumers, but the industry is looking for emerging market spaces. AT&T just announced it would be offering its U-verse IPTV product and its via-resale DirecTV service, bundled together with landline voice, wireless voice and broadband Internet services, to the small business market. The company explained this package might be attractive for small businesses with client waiting rooms. Bundle of joy While there are a few risks involved in offering bundled services (a topic we will explore in a future post), by and large, the benefits of bundled services are many: 1. Enhanced customer loyalty - Customers are less likely to go to the trouble of unbundling services in order to switch providers. - Customers feel more connected to your organization on multiple fronts. (Both of these help to shield you from competitive displacement attempts.)   2. Simplified customer experience - Consumers enjoy the convenience of bundled services, which allows them to manage multiple services with a single billing statement and a single payment. - When money is tight, bundle customers will generally pay the entire bill, as opposed to paying only part of the bill.     3. Save provider time and money - Bundled billing reduces the number of bills sent each billing cycle, which means less paperwork for you and your customers. - Fewer bills sent also means fewer payments to process.     4. Penetrate new markets - Partnering with a company, who has a bigger footprint in a particular market, allows you to leverage that partner’s existing customer base. - Bundling also can help you penetrate a new market with more competitive price points.     5. Easier and less risky up-selling path for larger share of consumer products and services - The partner, already having an established relationship with the consumer, will have an easier time up selling your product offerings to their customer base.     If you’re thinking about getting into the bundling game — or expanding on your current bundling strategy — you need to know that getting bundling right is no easy task. Check back for future blog posts in which I’ll discuss what makes a “smart” bundled offering, as well as how to ensure you’re offering the right bundle to the right customers. In the meantime, if there are specific topics in the realm of bundling you would like to see addressed, please be sure to comment on this post.