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In this article…What is fair lending?Understanding machine learning modelsThe pitfalls: bias and fairness in ML modelsFairness metricsRegulatory frameworks and complianceHow Experian® can help As the financial sector continues to embrace technological innovations, machine learning models are becoming indispensable tools for credit decisioning. These models offer enhanced efficiency and predictive power, but they also introduce new challenges. These challenges particularly concern fairness and bias, as complex machine learning models can be difficult to explain. Understanding how to ensure fair lending practices while leveraging machine learning models is crucial for organizations committed to ethical and compliant operations. What is fair lending? Fair lending is a cornerstone of ethical financial practices, prohibiting discrimination based on race, color, national origin, religion, sex, familial status, age, disability, or public assistance status during the lending process. This principle is enshrined in regulations such as the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). Overall, fair lending is essential for promoting economic opportunity, preventing discrimination, and fostering financial inclusion. Key components of fair lending include: Equal treatment: Lenders must treat all applicants fairly and consistently throughout the lending process, regardless of their personal characteristics. This means evaluating applicants based on their creditworthiness and financial qualifications rather than discriminatory factors. Non-discrimination: Lenders are prohibited from discriminating against individuals or businesses on the basis of race, color, religion, national origin, sex, marital status, age, or other protected characteristics. Discriminatory practices include redlining (denying credit to applicants based on their location) and steering (channeling applicants into less favorable loan products based on discriminatory factors). Fair credit practices: Lenders must adhere to fair and transparent credit practices, such as providing clear information about loan terms and conditions, offering reasonable interest rates, and ensuring that borrowers have the ability to repay their loans. Compliance: Financial institutions are required to comply with fair lending laws and regulations, which are enforced by government agencies such as the Consumer Financial Protection Bureau (CFPB) in the United States. Compliance efforts include conducting fair lending risk assessments, monitoring lending practices for potential discrimination, and implementing policies and procedures to prevent unfair treatment. Model governance: Financial institutions should establish robust governance frameworks to oversee the development, implementation and monitoring of lending models and algorithms. This includes ensuring that models are fair, transparent, and free from biases that could lead to discriminatory outcomes. Data integrity and privacy: Lenders must ensure the accuracy, completeness, and integrity of the data used in lending decisions, including traditional credit and alternative credit data. They should also uphold borrowers’ privacy rights and adhere to data protection regulations when collecting, storing, and using personal information. Understanding machine learning models and their application in lending Machine learning in lending has revolutionized how financial institutions assess creditworthiness and manage risk. By analyzing vast amounts of data, machine learning models can identify patterns and trends that traditional methods might overlook, thereby enabling more accurate and efficient lending decisions. However, with these advancements come new challenges, particularly in the realms of model risk management and financial regulatory compliance. The complexity of machine learning models requires rigorous evaluation to ensure fair lending. Let’s explore why. The pitfalls: bias and fairness in machine learning lending models Despite their advantages, machine learning models can inadvertently introduce or perpetuate biases, especially when trained on historical data that reflects past prejudices. One of the primary concerns with machine learning models is their potential lack of transparency, often referred to as the "black box" problem. Model explainability aims to address this by providing clear and understandable explanations of how models make decisions. This transparency is crucial for building trust with consumers and regulators and for ensuring that lending practices are fair and non-discriminatory. Fairness metrics Key metrics used to evaluate fairness in models can include standardized mean difference (SMD), information value (IV), and disparate impact (DI). Each of these metrics offers insights into potential biases but also has limitations. Standardized mean difference (SMD). SMD quantifies the difference between two groups' score averages, divided by the pooled standard deviation. However, this metric may not fully capture the nuances of fairness when used in isolation. Information value (IV). IV compares distributions between control and protected groups across score bins. While useful, IV can sometimes mask deeper biases present in the data. Disparate impact (DI). DI, or the adverse impact ratio (AIR), measures the ratio of approval rates between protected and control classes. Although DI is widely used, it can oversimplify the complex interplay of factors influencing credit decisions. Regulatory frameworks and compliance in fair lending Ensuring compliance with fair lending regulations involves more than just implementing fairness metrics. It requires a comprehensive end-to-end approach, including regular audits, transparent reporting, and continuous monitoring and governance of machine learning models. Financial institutions must be vigilant in aligning their practices with regulatory standards to avoid legal repercussions and maintain ethical standards. Read more: Journey of a machine learning model How Experian® can help By remaining committed to regulatory compliance and fair lending practices, organizations can balance technological advancements with ethical responsibility. Partnering with Experian gives organizations a unique advantage in the rapidly evolving landscape of AI and machine learning in lending. As an industry leader, Experian offers state-of-the-art analytics and machine learning solutions that are designed to drive efficiency and accuracy in lending decisions while ensuring compliance with regulatory standards. Our expertise in model risk management and machine learning model governance empowers lenders to deploy robust and transparent models, mitigating potential biases and aligning with fair lending practices. When it comes to machine learning model explainability, Experian’s clear and proven methodology assesses the relative contribution and level of influence of each variable to the overall score — enabling organizations to demonstrate transparency and fair treatment to auditors, regulators, and customers. Interested in learning more about ensuring fair lending practices in your machine learning models?    Learn More This article includes content created by an AI language model and is intended to provide general information.

Experian's Automotive Consumer Trends Quarterly Report goes beyond understanding general car-buying trends. Each quarter, we delve deeper into a specific vehicle segment, analyzing the demographics (who's buying) and psychographics (why they're buying) of those consumers. New eBrochures help turn insights into action Although valuable, what can you do with this information? That's where The Trade Desk comes in. They leverage the insights from our report to create a comprehensive omnichannel strategy for reaching in-market car buyers. This strategy goes beyond demographics, revealing: Top web content preferences: Where are these consumers spending their online time? Frequented websites and apps: What digital platforms are most relevant to them? Top CTV and audio examples: Which streaming services and audio channels should be targeted? A Consolidated Snapshot The Trade Desk provides a clear picture of channel distribution, ensuring your advertising reaches the right audience across the most effective platforms. This combined approach empowers you to target car shoppers with laser precision, maximizing your advertising impact. Experian Automotive and The Trade Desk are committed to developing solutions that balance advertiser needs with consumer privacy. The Trade Desk’s clients can access Experian’s over 2,400 syndicated audiences across eight verticals, including over 750 automotive audiences by make, model, fuel type, price, vehicle age, and more. Accessing the insights: To view the latest Experian Automotive Consumer Trends Quarterly Report, visit us at: www.experian.com/automotive/auto-consumer-trends-form. You can review Experian and The Trade Desk’s collaborative eBrochures for the following vehicle segments:

In this article…What is a TOAD attack?How TOAD attacks happenEffective countermeasures Keeping TOADS at bay with Experian Imagine receiving a phone call informing you that your antivirus software license is about to expire. You decide to renew it over the phone, and before you know it, you have been “TOAD-ed”! What is a TOAD attack? Telephone-Oriented Attack Deliveries (TOADs) are an increasingly common threat to businesses worldwide. According to Proofpoint's 2024 State of the Phish Report, 10 million TOAD attacks are made every month, and 67% of businesses globally were affected by a TOAD attack in 2023. In the UK alone, businesses have lost over £500 million to these scams, while in the United States the reported monetary loss averaged $43,000 per incident, with some losses exceeding $1 million.TOADs involve cybercriminals using real phone numbers to impersonate legitimate callers, tricking victims into divulging sensitive information or making fraudulent transactions. This type of attack can result in substantial financial losses and reputational damage for businesses. How TOAD attacks happen TOAD attacks often involve callback phishing, where victims are tricked into calling fake call centers. Before they strike, scammers will gather a victim's credentials from various sources, such as past data breaches, social media profiles, and information bought on the dark web. They will then contact the individual through applications like WhatsApp or call their phone directly. Here is a common TOAD attack example: Initial contact: The victim receives an email from what appears to be a reputable company, like Amazon or PayPal. Fake invoice: The email contains a fake invoice for a large purchase, prompting the recipient to call a customer service number. Deception: A scammer, posing as a customer service agent, convinces the victim to download malware disguised as a support tool, granting the scammer access to the victim's computer and personal information. These techniques keep improving. One of the cleverer tricks of TOADs is to spoof a number or email so they contact you as someone you know. Vishing is a type of phishing that uses phone calls, fake numbers, voice changers, texts, and social engineering to obtain sensitive information from users. It mainly relies on voice to fool users. (Smishing is another type of phishing that uses texts to fool users, and it can be combined with phone calls depending on how the attacker works.) According to Rogers Communication website, an employee in Toronto, Canada got an email asking them to call Apple to change a password. They followed the instructions, and a “specialist” helped them do it. After receiving their password, the cyber criminals used the employee's account to send emails and deceive colleagues into approving a fake payment of $5,000. Artificial intelligence (AI) is also making it easier for TOAD phishing attacks to happen. A few months ago, a Hong Kong executive was fooled into sending HK$200m of his company's funds to cyber criminals who impersonated senior officials in a deepfake video meeting. Effective countermeasures To combat TOAD attacks, businesses must implement robust solutions. Employee training and awareness: Regular training sessions and vishing simulations help employees recognize and respond to TOAD attacks. Authentication and verification protocols: Implementing multi-factor authentication (MFA) and call-back verification procedures enhances security for sensitive transactions. Technology solutions: Bots and spoofing detection and voice biometric authentication technologies help verify the identity of callers and block fraudulent numbers. Monitoring and analytics: Advanced fraud detection and behavioral analytics identify anomalies and unusual activities indicative of TOAD attacks. Secure communication channels: Ensure consumers have access to verified customer service numbers and promote secure messaging apps. A strong strategy should also involve using advanced email security solutions with AI fraud detection and machine learning (ML) to effectively defend against TOAD threats. These can help identify and stop phishing emails. Regular security audits and updates are necessary to find and fix vulnerabilities, and an incident response plan should be prepared to deal with and reduce any breaches. By integrating technology, processes, and people into their strategy, organizations can develop a strong defense against TOAD attacks. Keeping TOADS at bay with Experian®  By working and exchanging information with other businesses and industry groups, you can gain useful knowledge about new or emerging threats and defense strategies. Governments and organizations like the Federal Communications Commission (FCC) have a shared duty to defend the private sector and public consumers from TOAD attacks, while many of the current rules and laws seem to lag behind what criminals are doing. By combining the best data with our automated ID verification processes, Experian® helps you protect your business and reputation. Our best-in-class solutions employ device recognition, behavioral biometrics, machine learning, and global fraud databases to spot and block suspicious activity before it becomes a problem. Learn more *This article includes content created by an AI language model and is intended to provide general information.