E-Scoring Credit Algorithms Invisible To Consumers Used to Market and Evaluate, Does Not Fall Under Federal Law And Such Are Use
Posted Aug 20 2012 3:22am
This is a good question as we have states debating and some setting up health insurance exchanges. E-scoring as noted here does not fall under federal law so they can buy and sell data and use it to market as well. Ever wonder why you get some solicitations at times either in the mail or online? What if an insurance company is using such “scoring”? If there are exchanges set up, what good does it do to help those who are no insured with some bad credit rating information as those are the folks struggling to make a come back and obviously they are the crowd the healthcare reform law is trying to help. If e-scoring is used to determine how to sell and market them with credit scoring sources outside the normal federally approved sources, what’s this going to do?
The founder of one such company made $89 million when he sold RiskWise analytics to LexisNexis and then used that money to start eBureau. See how this type of business builds on itself with the algorithms for analytics use and it works behind the scenes to where nobody knows.
Obviously federal laws are outdated here it appears. As a consumer, you don’t even know the information is being collected and reported on you, not nice. In addition, you have no idea as to what “score” has been generated either so again an error that shows up here can also have the ability to black ball consumers, especially those who are trying to recover. Interestingly enough I found this tweet on the Ebureau Twitter site. Is this coming to a hospital near you? If nothing else if states that hospitals are on the list as targets.
Recently in the news the question of why the HCA hospital chain is so profitable…do they use services as such? Might be good question to ponder?
You know also one might ponder how this comes into play with re-admissions and the search for the perfect algorithm there? Do companies search for risk in this fashion when re-admitting patients? It’s certainly there to buy and write queries to use it that way. I’m a realist with data and queries can be written at any time and used so again I am posing this question as everyone today is addicted to analytics of one form or another. A lot of analytics are great and do a lot of good but when we start looking at encroaching into ethics areas for the sake of a bunch of algorithms and profits, it’s time to take a deep breath and look at what we are really doing. Is the doctor doing the readmitting being presented with some fashion of this type of information? If not now is this on the “data agenda”? The algorithms of healthcare are way beyond what our Congress understands today and again since credit reporting as eBureau is invisible, the minds of Congress seem to be invisible as well.
One other item to keep in mind too is look at the millions and billions of dollars the data sellers make and I’ll repeat my one example of Walgreens in 2010 who made just short of $800 million selling data only, so how big is this pool of profits…huge! This is exactly why these folks need to be charged an excise tax for starters. This is a nasty business for the consumer as if they are not excluded by one algorithm, another algorithm will put them on a “hot” market list and bug the crap out them. It’s back to the old “cherry picking” here and pretty soon the numbers of cherries are going to disappoint as the queries become more complex and more data is mined.
Back in February Chapter 17 of my Attack of the Killer Algorithms addressed this idea..this is also why we have a slow down with manufacturing in the US as companies just go out and mine and sell data with hiring a few geeks rather than build factories as there’s little overhead by comparison and very few employees needed, and again there’s no government regulation here. So what Congress is going to do with this complex matter remains a mystery as they seem to be stuck on the “default” topic of abortions.
They always come back to women’s health issues when complexities go beyond their comprehension or what they want to deal with. All you have to do is look at some of the ridiculous laws that get prime attention today, in the news all the time.
We can go a step further here as well and talk about how much of the data agencies as such are collecting that is flawed. Why” Companies and people lie, make data input errors and use formulas to make money and then create studies to substantiate the selling of the analytics, flawed data and all. FICO does a good job of “algo duping” with their medication compliance analytics.
”Hey dude let’s crunch some numbers and see if we can come up with some analytics to sell”
Data mining leads to spun data in many areas and it hurts consumers as we are now getting credible data combined with non credible data and crunching numbers is fine but when you do something like FICO sells on the medication compliance analytics they sell, we have mismatched data as this is the perfect example of credible with non credible information being combined. How do you combine such intelligence and then turn around and score people individually from zero to 500 and sell that analyzed data to insurance and drug companies as being credible? It hurts consumers as we don’t have enough folks out there that know how to work with “flawed data” and take everything they see on the computer screen to the bank? There’s the big part of the insanity today and when a naïve novice looks at such numbers a patient may get denied access to medications. Duh?
Ok so coming back around here let’s talk about selling health insurance exchanges…how’s this going to work. Again we won’t know what companies are using such analytics and how will they be used to cherry pick and deny applicants and “algo dupe the consumer and government”. It’s an algorithm game. Health insurance exchanges will fail if credit companies as such are not brought under Federal Law as the algorithm scoring games will flow. Right now this doesn’t speak well for HHS director Sebelius with her own former state where she was governor returning federal funds for insurance exchanges. Do you think they might know something in Kansas about how some of this works? This is why I keep saying we need someone in charge at HHS with some data knowledge so they can think on their feet quickly as figurehead executives are becoming a thing of the past. Nothing personal here but big business has figurehead executives by the “algorithm balls” and they have not figured this out yet nor even speak about it as they just don’t get it.
So again this is something to look at before things are finalized as for sure this is yet one more unintended consequence that will occur if nobody addresses it and will make the insurance exchange business nothing but a zoo and disappointment for consumers. Again it is the Attack of the Killer Algorithms and it appears that we have a Congress that has no clue on how to “model” laws that will work. If you don’t look at every angle of a law and how it will play out, this is what you get, the battle of the algos on consumers. Again these types of agencies should be regulated under federal control and they should pay to be licensed and assessed big excise taxes and I think about this as a consumer when I have to pay an excise tax to buy a tire. Tax the intangibles that companies use today for big profits and give the consumers and the companies making tangibles that we need to live a break!
So again with health insurance exchanges, who’s going to complete this cycle and fix the laws? Once again the intelligence at corporate levels is ahead of the game and consumers lose as the algorithms work for profit and move money and not only can the consumer not see the analytics being used, they are not told either, so game on for the complexities of insurance exchanges that will end up being a burden to administrate as the algorithms for shareholders and profits will rule again as the government tech departments are asleep at the wheel and on top of that missing out on a huge amount of tax revenue they could generate and give the consumer a break. Companies may pay $8 for an insurance lead and up to $35 for a financial lead and $75 for a mortgage prospect so you are for sale in more ways than one and look at the money and profits made. It’s all about the cherry picking marketing business that is algorithmically combined with risk assessment for the spin.
Intangible data mining companies that sell data are not people – most are algorithms for profit. BD
So here’s a new score to obsess about: the e-score, an online calculation that is assuming an increasingly important, and controversial, role in e-commerce.
These digital scores, known broadly as consumer valuation or buying-power scores, measure our potential value as customers. What’s your e-score? You’ll probably never know. That’s because they are largely invisible to the public. But they are highly valuable to companies that want — or in some cases, don’t want — to have you as their customer.
Online consumer scores are calculated by a handful of start-ups, as well as a few financial services stalwarts, that specialize in the flourishing field of predictive consumer analytics. It is a Google-esque business, one fueled by almost unimaginable amounts of data and powered by complex computer algorithms. The result is a private, digital ranking of American society unlike anything that has come before.
It’s true that credit scores, based on personal credit reports, have been around for decades. And direct marketing companies have long ranked consumers by their socioeconomic status. But e-scores go further. They can take into account facts like occupation, salary and home value to spending on luxury goods or pet food, and do it all with algorithms that their creators say accurately predict spending.
Every month, eBureau scores about 20 million American adults on behalf of clients like banks, payday lenders and insurers, looking to buy the names of prospective customers. An eBureau spinoff called TruSignal , also located here, scores about 110 million consumers monthly for advertisers seeking select audiences for online ads. Mr. Meyer says eBureau’s clients use the scores to answer basic business questions about their potential audience.