Consumer Scores Are the Next Privacy Boogeyman in Washington

Report details 'hundreds of secret consumer scores'

Privacy hawks have come up with a new boogeyman called consumer scores, putting marketers once again on the defense in the debate over big data and privacy.

According to a study by the World Privacy Forum, which coined the term, there are literally "hundreds of secret consumer scores" usually generated by predictive modeling techniques. These scores are are used by the government and businesses alike to profile and predict consumer behavior.

But unlike the commonly known financial credit scores, these secret consumer scores are unregulated. In a new report, WPF argues that once a consumer is scored, there's no recourse for the consumer to change or modify the score. As a result, WPF says the most vulnerable consumers might be pigeonholed, targeted with fraudulent financial scams or offers.

"These scores offer predictions that can become consumers' destiny, whether they are right or wrong," said Pam Dixon, WPF's executive director and author of the study, "The Scoring of America: How Secret Consumer Scores Threaten Your Privacy and Future." "Secret scores can hide discrimination, unfairness, and bias," Dixon said.

The most famous consumer score is Target's pregnancy predictor score, which led to the household receiving lots of baby-related ads leading a perplexed father to discover that his teenage daughter was pregnant.

There are employment scores, tax return scores, law enforcement scores, health scores, even a medication adherence score.

Experian, for example, markets several scores. It produces a ChoiceScore, a sort of financial risk score, to help marketers target under under banked and emerging consumers. A Median Equivalency Score "assesses the potential risk for seriously derogatory behavior."

Another company, AnalyticsIQ has a Risk IQ Score to predict credit risk.

Marketers are more likely to rely on something like Acxiom's Consumer Prominence Indicator Score, a score to determine a consumer's economic footprint and marketing activity, or Equifax's Discretionary Spending Index to score a household based on discretionary spending power.

Although the report grants that consumer scoring is not "inherently evil" particularly when used properly in marketing, the report makes the case that no score should be secret and that consumers should be given access to the data that makes up their own scores so that they can challenge them and correct them.

Marketers counter that the term "consumer score" itself is misleading because it doesn't accurately describe how data is being used in marketing.

"It doesn't make any sense to call predictive analytics a 'score,'" said Rachel Thomas, vp of government affairs for the Direct Marketing Association. "In marketing, the interests of consumers are constantly changing, so there's no such thing as a static score."

Not only are the so-called "scores" fluid, marketers use the data only for marketing, not eligibility purposes that the law covers.

Marketers may have only themselves to blame for the new term that is now drawing Washington scrutiny. "We shoot ourselves in the foot on the business side by giving products names that can be confused on the consumer side," Thomas said. 'We have to be thoughtful about how we name our products."

The controversy over consumer scores recently caught the attention of the Federal Trade Commission, which held a workshop on the practice last month.

"The FTC is seeking to gain a better understanding of how data brokers are using big data to create scores about consumers, outside of the credit scores with which many Americans are familiar," said FTC chairwoman Edith Ramirez.