Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
Is big data right for the underbanked?
WASHINGTON and BOSTON (3/7/14)--A National Consumer Law Center (NCLC) study released Thursday warns that while big data promises it can make better products available to the unbanked and underbanked through predictive systems, the information based on those algorithms can be riddled with inaccuracies.
 
Big data brokers claim to be able to help some of the approximately 64 million consumers in the U.S. who have no credit history or lack sufficient credit history to generate a credit score--a state that in the modern world can cut off access to traditional banking services--by providing informed predictions of their histories.
 
The NCLC said it got 15 of its employees to request information about themselves from some of the largest data brokers in the country. The report's executive summary said that errors in the information ranged "from the mundane--a wrong e-mail address or incorrect phone number--to seriously flawed."
 
It went on to say that seven of 15 reports of a data broker that touts an ability to estimate income and education based on its advanced models contained errors in estimated income, nearly doubling the salary of one participant and cutting that of another in half, and 11 of the 15 reports incorrectly stated the volunteer's education level.
 
"Big data makes big promises. It promises to make better predictive algorithms that in turn can make better products available to the unbanked and underbanked. But can big data live up to this big promise?" the NCLC summary asks.
 
It suggests that when analyzing this use of big data, consumers and policy makers should be concerned with these questions:
  • Are the decisions based upon accurate data?
  • Can the algorithms, when fed with good data, actually predict the creditworthiness of low-income consumers?
  • Does the use of big data in reports used for credit, employment, insurance, and other purposes comply with consumer protection laws?
  • Is there the potential for a discriminatory impact on racial, geographic, or other minority groups?
  • Does the use of big data actually improve the choices for consumers?


RSS print
News Now LiveWire
Goodwill Industries latest to report data security breach http://t.co/gIaXNsT4Bk
13 hours ago
CUNA economist Schenk discusses regulators' focus on interest-rate risk. See CU Magazine: http://t.co/tW1p9rTSSv
15 hours ago
Fed issues annual report on general-use prepaid cards in gov't-administered payment programs. http://t.co/3zPhejSPZt
15 hours ago
Children in foster care face higher risk of identity theft via @NBCNews http://t.co/Dif0hCfBdA
15 hours ago
.@Cornerstone_CUL's leadership conference includes food drive for San Antonio food bank http://t.co/h2O8O4TxuD
16 hours ago