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Companies trying to predict credit risk based on lifestyle choices are trolling Internet and ...
By Jennifer Davies, UNION-TRIBUNE STAFF WRITER, Sunday, May 30, 2010
You're not paranoid. They really are out to get � your data.
Where you shop, what you buy, the websites you look at, even your Twitter feed — it's all of interest to a wide range of companies.
Financial institutions and other businesses have long used transaction information and consumers' online activity to sniff out fraud and find marketing opportunities, said Murray Jennex, a San Diego State University professor who has studied the subject extensively.
Now, those companies are taking the next logical step and trying to predict potential credit risk based on lifestyle choices, he said. They're even trolling for information on social-media sites such as Facebook, which improved its privacy standards last week after intense criticism.
How can what you buy hurt your credit? It could work something like this: If you're married and then you sign up for eHarmony.com , it might mean you're headed for a divorce, often a devastating financial blow. In response, a credit-card company could determine that it's time to lower your credit limit, Jennex said. If you've downgraded your shopping experience from, say, Nordstrom to Walmart, that switch could be a potential red flag for financial hardship, too.
"It might not seem fair," he said. "But from a risk standpoint it makes perfect sense."
When it comes to social-media sites — Twitter, Facebook and the like — it's less clear how businesses are using the data, but experts agree that a host of companies are capturing every available scrap of information posted, looking at who your friends are, double-checking your e-mail address and monitoring your likes and dislike.
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Jennex of SDSU agreed that the new frontier in data mining is social-media sites. Companies such as Bay Area-based Rapleaf provide analysis of tweets, friend connections, most recent activity on a social-media site as well as users' profile information.
Much of the data collected off such sites are already used to help companies market their services or to assess fraud. For instance, if you happen to be a good Citibank customer, the bank might market its service to your friends. If you apply for a loan and the e-mail address on your Facebook page doesn't match the one on your application, it could point to a possible problem.
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