“E-scores,” or “predictive scores” are not credit scores. The e-score is a consumer rating metric used to to determine an individual's potential value as a customer and to use that information to guide marketing efforts, explains the article, "What is e-score? - Definition from WhatIs.com." But how transparent are they?
E-scoring divides consumers into categories according to how likely they are to respond to a specific advertising pitch, such as a phone call, email, coupon, discount, or other advertisement sent as junk mail, spam, or telemarketing pitches. You may wish to see the site, "E-Score Celebrity - E-Poll Market Research." Or check out, "Secret E-Scores Chart Consumers’ Buying Power."
The e-score is a consumer rating metric used to to determine an individual's potential value as a customer and to use that information to guide marketing efforts. E-score algorithms factor in variables such as salary, occupation, home value, debt load and shopping history, and assign a numerical score, explains the article, "What is e-score? " Your e-score is the way businesses score you in order to categorize you to decide what to offer you and what to charge. You may wish to check out the sites, "Hey Dude, What's Your E-Score?" Or take a look at, "Why You Shouldn't Lose Sleep Over Your E-Score."
Your e-score is another way to put a label on you so marketers can track what you buy and offer what they think you should have, need, or want. Instead, e-scores are used for marketing or fraud detection, and aren't regulated by the government.
Consumers have no legal right to see their scores or correct errors in them. Your customer loyalty score, known as your e-score may decide what coupons you get, says a March 25, 2014 NY Times article by Lindsay Wise, McClatchy Washington Bureau, "Secretive 'e-scores' decide what you're worth." The article appeared in the Sacramento Bee, March 26, 2014 and yesterday in the Charlotte Observer. Your customer loyalty score also is your identity score in the eyes of businesses trying to sell you their products, but will target you if they think your income is similar to the average of the zip codes of where you live.
Telemarketers also target you if they find out you have a lot of equity in your home, such as older adults who have their home paid-off. Marketers looking at your e-score can judge you by your health score, identity score, or loyalty score, according to the NY Times article, "Secret E-Scores Chart Consumers' Buying Power."
Your shopping habits are in high demand by marketers
If it seems like everyone has their hand out for your hard-earned money or life savings, it's true. What businesses buy are thousands of scores that rank you, the consumer, based on data harvested from search engine histories, shopping habits, social media networks, mobile apps, surveys, and census reports. So the person who pays all cash for every transaction can't hide because the census reports give businesses the information they need to try to coax you to open your wallet and buy from businesses based on what you own, need to maintain, or have to buy out of necessity.
First comes the computer modeling that alerts any given business using data harvests as to whether the business spends money sending you a coupon for free shipping. The free shipping usually comes from a store you've bought something from before, or a business the marketers think you may want to patronize, such as clothing. If your score isn't high enough, and you're not rich enough or in the age group targeted, instead of a discount, you may get a coupon for a few dollars off.
Sometimes, the coupon with the $10 off only applies to a store that requires you take two buses to get to because, in Sacramento, for example, the bus to that food store comes only once an hour and never on weekends. So it's a two-hour jaunt up and a two-hour trip back, counting the hour you had to wait at a bus stop (with no shade) trying to lift your grocery-item heavy utility cart into the bus to get back home. Whoops, the store didn't know you were an older adult who never learned to drive or no longer can drive because of health issues. Meanwhile, the store that's a block from your home didn't send you the coupon for the $10 off. And there's another catch. You have to spend a minimum of $100 in groceries in order to get the $10 off with that coupon.
Another whoops....You're a senior citizen that doesn't spend more than half that to feed one or two people on your vegan diet. And you buy fresh organic produce and nondairy milk substitutes, another item overlooked by the computer modeling as well as the fact that you live solely on your social security retirement check with no pension because you never worked for a company that paid pensions, let alone other perks of retirement. So if you need coupons to buy fresh produce, nondairy products, no added salt products, and non-GMO products, the coupon isn't of value to you.
The scores rely on computer modeling to determine whether you receive a coupon for free shipping from your favorite clothing store, or one for $10 off, or no discount at all. They dictate whether you see ads for credit cards with high interest rates or for platinum cards with low rates and enticing rewards, says the article, "Secretive 'e-scores' decide what you're worth."
A score that assigns you a value based on the average credit score in your zip code could limit your financial choices by putting you in a less desirable pool of potential borrowers
If you live in an area with a zip code where other people earn a low-income or who don't have your graduate school liberal arts education, you're still classed as far as your credit score in the area where you live, even if you're only one or two people in the household. There are scores that route certain people to higher-ranking customer service representatives based on estimated purchasing power. You're out of luck for being a frugal buyer, growing your own vegetables, or for practicing other money-saving applications.
As for identity fraud, there are various scores designed to catch identity fraud that can affect your ability to open a bank account, purchase a cellphone or board an airplane. It's only a matter of time before the e-scores get scrutinized more by the Federal Trade Commission. If anyone is watching the watchers, then who's investigating how companies collect and use consumer data?
Are consumers their own watchdogs? Or do they leave it up to the Federal Trade Commission to do the investigative reporting?
Somebody well-qualified needs to look into various secret shopper operations where consumer information is sold so businesses can make more credit, insurance, employing, housing, promotion, or other types of sales marketing decisions. See, "Federal Trade Commission Act."
Senior citizens especially are getting annoyed by the incessant calling of telemarketers who target them based on the fact that many have equity in their homes or are judged too old and memory-challenged to resist the onslaught of telemarketers trying to trick them into having someone come out to the house for home repair jobs, for buying senior alert devices or hearing aids that they can obtain from companies recommended by their HMOs, or to sell them everything from computer software and carpet cleaning to air conditioner services and hearing aids and insurance. For the frugal customer trying to save, it's having the phone ringing constantly with telemarketer and robocalls when the marketers ignore the do-not-call lists.
The big problem is brokers allegedly willing to sell consumer information for credit, insurance, employment or housing decisions, a violation of the Fair Credit Reporting Act
Recently, the FTC sent warning letters to the companies. The article, "Secretive 'e-scores' decide what you're worth" names the companies. Two of the companies mentioned in that article are in Sacramento county. Four companies mentioned are in California. For further information, you can check out the sites for U.S. PIRG, a consumer group, or the Direct Marketing Association. The questions for consumers to ask are: What is ethical marketing? And can any person obtain access to the data collected about that individual? See, "Fair Credit Reporting Act | Federal Trade Commission." Or check out "A Summary of Your Rights Under the Fair Credit Reporting Act."
The problem is compounded by the fact that scoring isn’t necessarily very accurate. Check out the National Consumer Law Center Report recently published, a PDF article. You may wish to see the site, Big Data - National Consumer Law Center. The report builds on NCLC's advocacy, training, publications, and public policy work on consumer privacy issues. to promote family financial well-being. Learn more about NCLC's work in this area.