According to the Federal Trade Commission (‘the “FTC”) and media reports, companies are using predictive scoring for a variety of purposes, ranging from identity verification and fraud prevention to marketing and advertising. The scores, are touted to predict, for example, the likelihood that a person has committed identity fraud or that a certain transaction will result in fraud; the credit risk associated with mortgage loan applications; whether contacting a consumer by mail or phone will lead to successful debt collection; or whether sending a catalog to a certain address will result in an in-store or online purchase.
Consumers are largely unaware of these scores, and have little or no access to the underlying data. As a result, predictive scoring products raise a variety of privacy concerns and questions that the FTC intends to explore. Among the issues, are what consumer protections exist or should be provided, and whether certain scores are considered eligibility determinants that fall under the ambit of the Fair Credit Reporting Act.