Ask HN: Why do we allow Equifax, Transunion, and Experian to exist? On numerous occasions these services have proven to be unreliable stewards of people’s most private data. How come we haven’t tried to disband them? |
Ask HN: Why do we allow Equifax, Transunion, and Experian to exist? On numerous occasions these services have proven to be unreliable stewards of people’s most private data. How come we haven’t tried to disband them? |
https://www.fec.gov/data/receipts/?data_type=processed&contr...
The $1k is just an understanding that says "we provide a somewhat unsavory but necessary service to the country (with pretty shitty service to boot) -- it might not be hard for you to kill us (we're not popular and could easily be scapegoated for any number of crimes) but unless you replace us with something better in the process you will risk creating chaos and then voters will toss you out".
Even if we assume there is no additional benefit to a candidate aside from the $1k contribution on paper, keep in mind most of this comes from Equifax employees with individual contribution limits - note that the CEO and every VP/high exec contribute the maximum $2700/$5000 limit each cycle.
https://www.fec.gov/data/receipts/?cycle=2018&data_type=proc...
While in theory it's possible to calculate a credit score, the complexity of the reports these companies provide go much deeper.
Further, these companies operate across jurisdictions allowing for cross-border activities and economies of scale for MNC's.
What a strange world we live in. And it happened so quickly.
[1] https://asic.gov.au/about-asic/news-centre/find-a-media-rele...
Imagine a dating network where you could see how every ex rated someone, nobody would sign on for that, yet this is exactly what a credit reporting agency is.
Trust relationships are mostly subjective and do not scale well to individuals that do not have established networks. You can compare that to modern Venture Capital businesses where it is incredibly hard to even get a pitch if you are not well connected.
You might have heard the story of Adam Neumann raising 300M for his new PropTech business. Why would he get this amount of money? Because (1) he has shown that he can build businesses that generate revenue in the Billions (2) he is connected to the right people worldwide allowing him to raise funds and attract talent with ease. That places him in the 0.0001% of entrepreneurs.
And that is what modern credit bureaus deliver as a SaaS product. An easy way to understand if people can repay a loan (execute), run a profitable business, and are trustworthy.
Beyond credit scores, there's been a proliferation of "Know Your Customer" (KYC) requirements to reduce fraud and money laundering. The most common form of KYC is called "Knowledge Based Authentication" (KBA). This is when they ask you a series of multiple choice questions about previous addresses, schools, and employers. You usually have to get 4 out of 5 right to "pass". I paid cash for a new car from a Jeep dealership - before they'd complete the transaction, I had to pass KBA from Experian. I believe it was a state law that imposed the requirement.
I don't think it's practical to argue for the extinction of CRAs as a category. I do think it's practical to give consumers more control over their data - what is stored and where it goes. I've been tinkering on solutions for this, as have quite a few others in the data privacy community as well.
example #1 : a teenager starting his first job should not have his data shared by default (it is useless for him and increase(I think) the risk that his identity gets stolen)
example #2 : when you go to a lender, he could say, yeah, we check with equifax, maybe you want to opt-in with them.
The fact that they are unavoidable are the problem in my opinion. It creates a kind of monopoly. If it was opt-in, maybe we would see more alternatives companies offering the same kind of service with better security and customer service.
P.S : There is an error in my file and I never bother to fix it, I never lived there, it is clearly a fraud attempt and this is their error, not mine to fix.
P.P.S : not an expert on the topic and maybe I am missing out on important details
Banks share data with these services, so that all banks can mitigate risk.
Effectively, with all the banks providing information about their customers they can determine “future credit worthiness”.
It’s gone a bit further now and merchants can report you not paying and banks encourage every more data collection.
Banks that didn’t / don’t do this kinda of background check are actually breaking the law (KYC - “know your customer” - at least since 9/11, possibly before). As you could be providing funds to a terrorist (and that’s highly illegal).
To summarize, through regulation the government has strongly encouraged if not outright required these firms to exist.
To answer they question why haven’t disbanded them, well we don’t have the means to. Banks fund / elect politicians and if you step out of line (as kanye west did recently), they’ll debank and “cancel” you. Some politicians will push back on this; but it is rare and most have independent support (base, external large donor, ete)
Not on principle, but on reality. They’d be slow to get started, and change would take forever (short of legislation).
These companies exist to serve legitimate needs in the various industries they serve (as yuck as that statement may be) and have hundreds of years of experience judging people.
Yeah it sucks, but what’s the solution? Rely on people’s “feelings” about other people?
You’d bring back community bank managers in a heartbeat if you did that!
The rest of it like WorkNumber and TLO is really bad but it's exactly what you get in a neoliberal economy with very little privacy protection.
Let's stop using identification keys as authorization keys.
How much does anyone care? Most people freely give much more intimate information to other companies.
How much will those billion dollar companies spend to survive?
They also rate governments for municipals to countries.
I used to deal with issuer ratings quite extensively several jobs ago. Been away from it for about a decade, though.
Or just money
Do you have private notes about people you've met? Same thing happens with banks. Banks keep notes on how much you repay loans, how many loans you have, etc. Etc.
And the fact is, this data is very reliable. Prime Mortgages are paid back reliably. Subprime mortgages are not.
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If you are on the other side of the trade: deciding on which MBS to buy to secure your retirement income off of, you will be relying upon these statistics to keep your money safe.