A new type of “score” grades our value as customers

Partly open laptop computer

Credit scores are bad enough.

Now there’s a new type of consumer score that credit cards, colleges, insurers, banks and retailers are using to judge our potential value as customers and determine what to sell us.

According to the New York Times, the companies that create “e-scores” gather all sorts of personal information about us, such as our salary, home value and buying history.

They then shove that data into a secret algorithm that spits out a number that reflects your potential buying power.

Companies buy those e-scores and use them to determine what they’ll try to sell you or whether you’re even worth marketing to at all.

Can you ask anyone to see your e-score?


Can you even figure out if a company is using that number to evaluate you?

No again.

Which is where the concern comes in.

According to the Times, "federal regulators and consumer advocates worry that these scores could eventually put some consumers at a disadvantage, particularly those under financial stress. In effect, they say, the scores could create a new subprime class: people who are bypassed by companies online without even knowing it."

That's because the companies using e-scores aren’t just selling shoes and handbags.

"Financial institutions, in particular, might avoid people with low scores, reducing those people’s access to home loans, credit cards and insurance," Frank Pasquale, a professor at Seton Hall University School of Law, told the Times.

He worries that consumers with high scores will be solicited by banks and colleges while those with lower scores will be pushed to buy "subprime loans, vocational schools and payday loans."

What can we do about it?

Not much, unless you want to banish yourself from the Internet.

Hopefully, regulators will be able to step in and have some oversight because these scores are being used to determine financial worthiness.

You can read the entire New York Times story here: http://www.nytimes.com/2012/08/19/business/electronic-scores-rank-consumers-by-potential-value.html?pagewanted=all

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