Feature Article
Mark Pribish
Everyone Knows About Credit Scores; but Do You Know About Consumer Scores?
By Mark Pribish
Vice President and ID Theft Practice Leader

I have always viewed the end of each year as an opportunity to create and execute new plans and dreams to support my family, workplace and community.

On the other hand, I have a close personal friend who looks at 2010 as a time to "end the pain" from a recent divorce and unemployment that has beat-up her credit report and score.

Whether you have experienced a life changing event or the challenge of the long running recession, it is possible to recover personally, professionally and financially.

When it comes to financial recovery, most people only think about their credit report score.

However, did you know that there are a number of other consumer scores? These scores are designed to benchmark risk factors and buying habits as a new or current customer to your bank, credit card company, auto finance company, and other retailers and creditors.

The idea of individual consumer modeling, in which retailers and creditors try to identify and separate profitable customers from unprofitable customers along with predicting purchasing patterns and customer loyalty is not new but it is still not very well known by most consumers.

That said, and while I briefly wrote about this subject a couple of months ago, some consumer advocates over the last few years have labeled consumer scores as a dirty little industry secret.

For example, in a November 6, 2010 Wall Street Journal (WSJ) article titled "New Ways Bankers Are Spying on You," the WSJ reports on "Some newer ways lenders and financial-services companies are sizing up your financial behavior and credit-worthiness." Please see article here.

Well, to support the two sides to every story philosophy, not all consumer modeling is designed to spy on you, as much as it is used to protect you.

For example, a Transaction Score is used to identify fraudulent credit or debit card use based on your regular credit and debit card buying habits including the average dollar amount of each transaction, type of transaction and transaction location.

If your transaction amount, type and/or location creates a red flag, like using your credit card in Alaska, your credit card company might decline future activity until they have spoken directly with you to confirm (1) your business or vacation travel to Alaska, and thus the legitimacy of the charges or (2) you are not in Alaska and your credit card is being fraudulently used without your knowledge.

So under the "Did you know about consumer scores?" category, I have listed below seven additional examples of consumer scores and modeling including:

  • Application Score includes non-financial information excluded from a credit score like age, zip code, employment category, and ethnicity.
  • Attrition Risk Score is a retention tool to help retain existing customers since it costs more money to acquire a new customer than retaining a current customer.
  • Bankruptcy Score that measures the likelihood of your declaring bankruptcy.
  • Behavior Score where good or bad behavior motivates the retailer or creditor to a specific action.
  • Collection Score to determine which delinquent customer will most likely pay off their past due amount.
  • Response Model Score can help a retailer anticipate purchasing patterns, enhance the customer experience, and cross-sell new products/services.
  • Revenue Score can predict how much revenue and profit will be generated through each customer.

So back to my friend, life changing events, the current economic climate, and financial recovery, I would like to remind you to keep your identity safe when planning your new year's resolutions. Also I would like to wish each of you good luck and success with your new plans and dreams in the New Year.

To learn more about these threats and how to protect yourself and your family from Identity Theft, you can read my past newsletters at the Merchants Identity Theft Educational Website at www.idtheftedu.com.


Scam Central

Payday Loan Collector Scam

Not having enough money to make a house payment, car payment, car repair payment, etc. can leave you feeling helpless. Where do you turn for help: to friends or relatives, the bank? For many, the answer is a quick "Payday Loan", whereby you take out a short-term, high-interest loan against your paycheck; with the agreement that once you get your next paycheck you will pay the loan back. Now the car is fixed, the bill is paid and life is great. Paying back the loan is the next priority.

Now imagine how you would feel if you paid the loan back in full but start getting phone calls stating that you still owe money on the loan! You paid that loan off months ago. What's the deal? The deal is, it is a scam!

How It Works:

Identity thieves are preying on individuals who utilize these types of loans. They call under the false pretext of being a bill collector or lawyer representing a payday loan company informing you that you have not paid your loan. They continue to harass you, including threats of arrest or lawsuit if you do not immediately pay the loan either by giving them your bank account or credit card number, or by wiring them money. The caller seems legitimate because they may have information about you, which can include where you work, your driver's license number, your social security number or other personal information - even your co-workers names.

Your Defense:

This scam is becoming more and more common. In the past month alone, our recovery advocates have resolved numerous cases of individuals affected by this scam. Payday loans certainly have some advantages, particularly to those who have no credit or bad credit and need money quickly. However, that does not mean you have to fall victim to some opportunistic scam artist trying to cash in on your misfortune. Whether you have ever taken out a payday loan or not, beware of harassing collectors and con artists. Never give in to this type of harassment, and never give out your bank account or credit card number over the phone, or wire money in circumstances like this.

Be sure to ask yourself if you have ever even taken out a payday loan. If the answer is no, this person definitely has no business calling you; hang up immediately. Even if you have, this person may still have no business calling you, especially if the loan has been paid. Be sure that you get the callers name and the organization they claim to be representing. If you experience repeated harassing phone calls from the same individual or organization, file a complaint with the FTC and pass along whatever information you can in regards to the call.

If you do owe money, perhaps not to this scam artist, there are still Collections-related protections you are entitled to. There is legislation in place called the Fair Debt Collection Practices Act (FDCP Act), which does not allow collectors to do many of the things these scam artists are doing. Understanding your rights ahead of time is helpful in detecting a fraudulent phone call. The below list is merely a portion of what legitimate collectors are not allowed to do taken directly from the FDCP Act:

  • 806 - (1) "The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person."
  • 806 - (5) "Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number."
  • 807 - (3) "The false representation or implication that any individual is an attorney or that any communication is from an attorney."
  • 807 - (4) "Implicate that nonpayment of any debt will result in the arrest or imprisonment of any person."
  • 807 - (7) "The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer."

Whether you have used a payday loan service or not, do not fall victim to this scam. Know your rights ahead of time and keep vigilant records of any harassing phone calls received in regards to a payday loan. Take whatever precautions you can to preserve and protect your personal information and money.

If you believe your identity has been stolen, call 866.SMART68 today.