JR TOC Review

As a child, one of the things we all learn is cause and effect. If someone is hungry, then they eat food. If someone is tired, then they take a nap. So logically, one can infer that since we are seeing a recovering housing market, more people will want to buy houses, thus creating a need for more homes to be built. But that’s what makes the findings from Experian’s Q4 Metro Business Pulse analysis all the more intriguing. Although the housing market is showing signs of improvement, the construction industry continues to struggle with below-average business credit health, including a lower-than-average risk score, paying their bills more days beyond contracted terms, had higher bankruptcy rates and had a greater percentage of delinquent debt than other industries. However, despite the direction of the industry as a whole, there were pockets of progress, especially in areas hit hardest by the housing collapse. For instance, construction businesses in Phoenix, Ariz. had among the lowest delinquency rates across the industry (lower than approximately two-thirds of the industry). Not so surprisingly though, other areas hit hardest by the housing bust were not as successful. Areas such as, Las Vegas, Nev., Miami, Fla., Fort Myers, Fla., and Orlando, Fla., all continued to struggle across most business credit health categories. In addition to having lower-than-average risk scores and high delinquency rates, the collective grouping paid their bills the most days past due, totaling roughly 92 days beyond contracted terms. To see detailed findings from the report, as well as other business credit trends seen throughout the quarter, register for Experian’s Quarterly Business Credit Review Webinar on March 18, 2014, at 1 p.m. Eastern time.

In a world where customized advertising is delivered directly to the right group of people in the most targeted ways, it’s hard to remember that life wasn’t always this convenient. Because marketing information service providers (aka: “data brokers”) play such an important role in our lives and our economy, I thought I’d share five little-known facts about the marketing data industry. 1.       Marketing information service providers don’t operate in secret – they’re fully transparent and act with consumers’ permission. Data-driven marketers are far from the “shadow industry” some envision. This industry represents a significant portion of America’s economy, employing about 675,000 people and contributing $156 billion in revenues annually. That’s not the profile of an industry in hiding. What’s more, the marketing data industry generally collects consumer information with the permission of the consumer, following the Direct Marketing Association’s ethical guidelines. They’re required to provide notice to consumers and honor a person’s choice to opt out, and they limit the use of the consumer information they collect to marketing purposes only.  2.       The industry provides valuable benefits to society. Responsible information sharing enhances economic productivity and protects against fraud and identity theft. It also facilitates access to fair and affordable credit and ensures that companies can effectively reach consumers with relevant products and services. Most consumers in a recent Experian survey weren’t concerned about the use of their data, and in fact recognized certain benefits, such as coupons, lower prices and retail discounts. Also consider: consumers’ ability to search the Internet or check the weather report for free is driven in large part by the profits available through targeted online advertising. At Experian, much of our marketing data is derived and based upon the extremely intelligent and talented work of data scientists, and the responsible usage of this data is a key ingredient to our nation’s productivity, innovation and ability to compete in the global marketplace.  3.       The majority of companies use consumer data responsibly – and for the few who don’t, the problem isn’t the data, but instead a rogue entity violating the law. In any industry, a few bad apples can leave their mark, but the good news is that those who use data inappropriately are few and far between. Laws governing unfairness and deception can be used to stop the bad schemes of predatory lenders and fraudulent marketers. In fact, we feel strongly that regulatory agencies should enforce existing laws against companies engaged in unfair or deceptive marketing and lending practices. 4.       Marketing information service providers are bound by a comprehensive set of legal and self-imposed regulations that protect consumers. A number of laws provide comprehensive protection for consumers, such as the Federal Trade Commission Act, the National Do Not Call Registry, the Controlling the Assault of Non-Solicited Pornography and Advertising (CAN-SPAM) Act, the Children’s Online Privacy Protection Act (COPPA), the Gramm-Leach-Bliley Act, fair lending laws, and state laws and regulations. But beyond these requirements, the industry’s robust self-regulation standards, including those from the Digital Advertising Alliance, are highly effective and provide meaningful choices to consumers. Additionally, strict adherence to the Direct Marketing Association’s long-standing guidelines for ethical business practice assures marketers maintain consumer relationships that are based on fair and ethical principles. At Experian we also have adopted an internal "Privacy by Design" process. This brings together representatives from across the company; all working together to ensure that every new product innovation is designed with the consumer's best interest in mind. 5.       Data-driven marketers aren’t the only entities that analyze data and create segment markets. Whether its hotel chains offering discounts to loyalty program members or airlines offering variable pricing, dynamic marketing has been a staple within our economy for decades. The vast majority of data analysis and market segmentation is conducted by companies analyzing their own customer data – so market segmentation is not only the province of third-party data providers. The bottom line: marketing information service providers are crucial to how we do business in the U.S., and are part of what fuels the American economy. In addition to promoting economic growth, responsible data usage ensures companies can effectively reach consumers with products and services that are most relevant to them.

The FTC has advocated for the creation of a central website where marketing information service providers (FTC calls them “data brokers”) would be listed, with links to these companies, their privacy policies and also choice options, giving consumers the capability to review/amend the data that companies maintain. The FTC claims that such a website would bring needed transparency to the practices of companies that are not well-known to consumers. However, the proposal raises many more questions than it answers. The FTC first discussed this proposal in its 2012 report, entitled “Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers,” and FTC Commissioners and staff have repeatedly cited the need for a centralized  website in testimony before Congress and speeches to stakeholder groups. The proposal was also referenced in December 2013 reports issued by the Government Accountability Office (GAO) and Senate Commerce Committee. The concept seems simple, but it would almost certainly have the unintended effect of confusing consumers and eroding trust in e-commerce. Experian believes there are alternatives that would work better to improve consumers’ understanding of the role information providers play in the US economy, and how consumers can control the use of data held by these companies. No clear definition of a “data broker” The FTC’s central website proposal is based upon the mistaken presumption that there are only a few large companies in the marketplace that would be subject to these requirements. Unfortunately, the FTC has been unable to clearly define “data broker” in a manner that does not sweep in companies occupying large swaths of the economy. In December 2013, the GAO admitted as much, noting that “determining the precise size and nature of the industry can be difficult because definitions for resellers vary.” The Direct Marketing Association (DMA) estimates that even a narrow definition of a marketing information service provider is likely to include more than 2,500 companies from all sectors of the economy. Of course, more broadly, tens of thousands of US businesses that share and use consumer data to deliver products and services to their customers will be significantly impacted. Simply put, the entire data industry – extremely vital to the US economy — cannot be neatly or accurately identified and then subjected to unrealistic requirements of a single website. A single website doesn’t provide consumers with meaningful disclosure Due to the lack of a narrow definition of a “data broker,” the potential scope of coverage is unlimited. As the GAO found in its report, the industry for consumer data is generally separated into four broad categories. These categories are truly industries in themselves, including:  those providing fraud prevention services; those helping businesses make credit eligibility decisions; those providing consumer look-up services (i.e. telephone directories); and those that provide information for marketing and advertising purposes. As a way of limiting the scope of the proposal, the FTC has suggested that only the leading “data brokers” would be required to be included on the centralized website. This is counterintuitive, as it is these very industry leaders that have comprehensive compliance and disclosure measures already in place. It is also these industry leaders that follow robust laws (such as the Fair Credit Reporting Act), regulations (such as FTC’s Section 5), and also adhere to strong self-regulations (such as those required by the Direct Marketing Association). Further, having only a fractional portion of the industry make disclosures would not help promote greater transparency. Instead, the companies that consumers are least aware of – literally dozens and dozens of smaller data providers with long histories of questionable practices — would be free to operate outside the norms of self-regulation and best business practices. Again, these are the companies upon which the FTC truly needs to set its sights through enforcement of existing laws and regulations. The proposal’s content and format requirements remain undefined The FTC’s proposal is premature in other respects as well, raising questions about what information companies would be required to provide to consumers and in what formats. For example, here are just a couple of key considerations not currently addressed by the FTC’s proposal: Would data brokers be required to provide consumers the right to view and correct data about them? How would the data be presented to consumers? Would it be in standardized formats?  Would it include an explanation of the context of how the data is used? This gets at the heart of enabling consumers to view the data in a way that is informative, meaningful and easy for them to understand, and yet the FTC hasn’t addressed them in its proposal. Better alternatives exist to increase transparency There are much better options available to consumers that would allow for enhanced transparency. These alternatives would also avoid great expenses that would be borne by both the government and a vital industry in the operating of a website with little or no benefit to consumers. First, companies that collect and share consumer information for marketing purposes should voluntarily adhere to the DMA’s ethical guidelines, which require companies to provide robust notices to consumers and honor consumers’ choices to opt-out of having their data used for solicitations. The guidelines also require that marketing information be used only for marketing purposes. In addition, consumers who wish to have their data removed from marketing databases can choose to do so through existing opt-out mechanisms. These are available through numerous venues, including both companies’ own websites (see Experian’s own opt-out website), as well as through the DMA. We also believe that regulatory agencies should enforce existing laws against companies engaged in unfair or deceptive practices marketing and lending practices. Finally, Experian continues to play a leading role in improving the industry’s efforts to increase transparency and consumer understanding. For example, we’re working with DMA to improve its self-regulations in this area. Revisions to the guidelines will provide an immediate, workable, and enforceable way to increase the transparency and consumer understanding of data broker practices.

Every organization that touches consumer data is responsible for creating and maintaining consumer trust writes Rick Erwin, President of Targeting at Experian Marketing Services, in a recent issue of Direct Marketing News. Erwin, a direct marketing industry veteran and DMA board member, challenges the data industry at large to adopt strict guidelines and business principles that further consumer trust and effective data stewardship. Most organizations within the data industry realize the need for greater consumer education around privacy, but how do we address that need and put it into practice? At Experian Marketing Services, for example, we are guided by balance, accuracy, security, integrity and communications, the five tenets of our Global Information Values. These values aren’t visionary standards that we strive to meet; they dictate how we do business, daily. Data-driven marketing is an important sector of business and can add significant value to the end consumer. But, as Erwin emphasizes, building consumer trust for data-driven marketing requires that all companies within the data and ad tech ecosystem adopt and implement similar principles. You can read more about the five Global Information Values and how they come to life at Experian Marketing Services in Erwin’s article, “We’re all links in the chain of customer trust.”

Most consumers (89 percent) agree that credit plays an important role when buying a home or a car but only 73 percent recognize that identity fraud could affect their ability to get loans with favorable interest rates, according to a new survey from Experian Consumer Services. In addition, more than half of big-ticket purchasers fail to check their credit at any point in the buying process, which leads to surprises when it comes time to close the deal. “Identity fraud is real and affects consumers at very important times of life,” said Ken Chaplin, senior vice president of marketing for Experian Consumer Services. “In today’s environment, it’s especially important that consumers check their credit regularly to spot signs of fraud, understand better what affects their credit and make decisions that will help them be in the best position possible when it comes time to buy their dream home or car.” The key highlights of the research include: Many consumers live credit confident: Eighty-two percent of consumers report they feel confident about their credit status — only 14 percent say they worry their credit status might hurt their ability to make a home or vehicle purchase Credit affects when and what people buy: Sixteen percent of respondents delay purchasing a vehicle or home in order to improve their credit — 13 percent would purchase a more expensive car or home if they had better credit Checking credit plays a part in the buying process: Sixty percent of home buyers and 25 percent of car buyers check their credit as part of the purchase process For those that check their credit: Thirteen percent were surprised by their credit scores Thirty-six percent said their credit scores were higher than expected Eleven percent report their credit scores were lower than expected Eleven percent found something negative on their credit report that they did not know about Consumers can learn more by visiting Experian.com and watching the most recent commercials from Experian Consumer Services about how they can live credit confident™ when buying a car or securing a home loan. Survey methodology The data points referenced above come from a study commissioned by ConsumerInfo.com® Inc., an Experian company, produced by research firm Edelman Berland and conducted as an online survey of 500 car and home buyers (250 car buyers, 250 home buyers). Buyers were defined as adults who had purchased within the past year or plan to purchase in the next year. Interviewing took place from January 27–30, 2014. The margin of error is plus or minus 4.4 percent. Experian

Agreement extends Experian data and consulting services to ProAct clients Experian®, the leading global information services company, today announced an agreement with Ser Technology, developer of ProAct, a Web-based business intelligence consumer lending analysis and data warehousing solution. The agreement integrates Experian’s Global Consulting Practice expertise with ProAct providing SerTechnology’s credit union clients a 360 degree portfolio view, improving efficiency in the delivery of portfolio risk management decisioning. “We’re excited to collaborate and work more closely with Experian,” said Douglas White, executive vice president of business development at Ser Technology. “Credit unions are overwhelmed with increased risk management compliance burdens as well as executing strategic portfolio risk management strategies. With Experian, credit unions can now leverage ProAct and Experian data and business consulting for strategic portfolio risk management solutions.” ProAct clients can leverage Experian data across a broad spectrum of deliverables, including automated valuation model analysis, credit score migration, loss forecasting and stress testing many different scenarios. Experian’s consulting services will augment ProAct and Experian data, providing the insight and direction credit unions need to evaluate opportunities to improve their customer relationships. “Experian is committed to providing the advice needed to execute strategic decisions using Ser Technology software offering credit unions an essential portfolio risk management and data warehousing framework,” said Shannon Lois, vice president of Experian’s Global Consulting Practice. Experian’s Global Consulting Practice is a credentialed consultancy dedicated to creating measurable and sustainable value for organizations around the globe in a variety of industries. About Ser Technology Ser Technology Corporation, is a technology development and service company and specializes in credit pre-approval marketing, consumer lending analysis, instant credit decisioning and proprietary data encryption for over 2,700 credit unions in the U.S. The company’s passion for excellence is reflected in their web-based ProAct software which is gaining a solid reputation as being a leader in portfolio risk management solutions. For more information, visit www.sertech.com