Equifax Eyes Are Watching You--Big Data Means Big Brother

Equifax, the giant credit bureau, is using Big Data to create new analytics products from 800 billion business and consumer records worldwide. Its CIO says, 'We know more about you than you would care for us to know.'

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Typically, someone with valid identity information will show up in other files, even if he doesn't have credit, by paying a phone bill, for example, or subscribing to a magazine. Manthey says the Equifax data showed that the synthetic individuals "obtained lines of credit, then vaporized."

"A normal person would have a footprint in many areas," Brooks adds. "Our 360-degree view lets us not be fooled."

This kind of reverse analytics, spurred by Webb, ultimately resulted in new fraud-detection tools for Equifax's security team to use with clients.

The fraudster brothers, meanwhile, are in federal prison and the dentist's office insider is on probation.

Beyond Financial Reporting

The way Webb sees it, new regulations for the mortgage industry hand Equifax another opportunity. The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, holds financial institutions more accountable for bad loans. Equifax quickly launched Undisclosed Debt Monitoring, an always-on service that monitors a borrower's major spending during the time between getting approved for a mortgage and the closing date. Taking out a car loan after you've been approved for a mortgage, for example, can change your risk profile, possibly putting you outside the bank's threshold for the mortgage deal.

Assessing the mortgage crisis, financial experts realized simple credit scores don't provide enough information for banks deciding whether to approve a big loan, Webb says. "We identified gaps in their knowledge."

Equifax can mold its technology into revenue-generating products to suit very different circumstances. Real-time identity verification, for example, can help a telecommunications company avoid fraud. Equifax can confirm for us that Elaine Quinn is who she says she is and pays her cell phone bills on time. We'll sell to her.

That same telco can also buy marketing services from Equifax, to build on the basic identity product. Equifax can tell us that Elaine Quinn has a high wealth score, a history of big spending in the summertime and is active on social media. Let's upsell her to our most expensive mobile phone and offer a discount on her data plan if she later gets two social-media friends to sign on with us.

Upselling is most effective in the moment when a customer is interacting with a company. Sending a pamphlet in the mail weeks later or even an email a few days later is far less effective, Webb says. Real-time identity verification and "decisioning" services let retailers, telecom companies and other organizations strike while the customer is standing there. And not with generic offers, but with ones tailored to that kind of customer.

"To the extent we can know who you are when you're doing a transaction, that's highly valuable," he says.

Equifax has extended far beyond the financial realm, and way beyond being a credit bureau. Patients and medical staff who need to prove their identities online to hospitals can use the company's authentication technology, which presents questions whose answers should be known only by the individual. "Which of the following streets did you live on: Greenlawn Ave., Baldwin Rd., Elmcrest Dr. or Mead St.?" Last year, Equifax started helping the Department of Homeland Security and U.S. Citizenship and Immigration Services check the employment eligibility of immigrants.

What's Next?

The question now is where, or perhaps even whether, this will end. Some privacy advocates worry that U.S. companies can find out too much about private citizens in the name of corporate profits. But even if Congress passes stricter laws, the privacy debate will never disappear, says Pew's Rainie. That's in part because an individual's decision to reveal personal data "is highly contextual and conditional," he says, depending on what they receive in return for disclosure. But that, too, can change over time. "People in different stages of life sometimes have different calculations about this."

Technology is another unpredictable force. Future IT capabilities will enable unforeseen uses of data. Companies, to remain competitive, must stay ahead of these trends, says Outsell's Mason, but follow a steady internal compass.

"Executives must bring to the table a sense of ethics around information, as well as knowledge of the laws and regulations," Mason says.

"The challenge that any credit bureau faces is balancing the potential for revenue with offering services and data that, while completely legal, seem to cross the line between what's right for the bottom line and what's clearly wrong for consumers," adds Ulzheimer, the credit consultant. He says credit bureaus have made consumer-friendly choices, so far, such as not permanently reporting negative credit events like bankruptcies.

At Equifax, CIO Webb emphasizes how solemnly the company regards its duty to follow the laws and regulations that rule how it can use information. "We have very strong governance and controls around how data gets consumed," he says. "We are trusted stewards of data and have a responsibility to protect it."

Senior Editor Kim S. Nash can be reached at knash@cio.com. Read her blog, Strategic CIO.

Copyright © 2012 IDG Communications, Inc.

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