Market Trends

Which part of the country has bragging rights when it comes to sporting the best consumer credit scores? Drum roll please … Honors go to the Midwest. In fact, eight of the 10 cities with the highest consumer credit scores heralded from Minnesota and Wisconsin. Mankato, Minn., earned the highest ranking with an average credit score of 708 and Greenwood, Miss., placed last with an average credit score of 622. Even better news is that the nation’s average credit score is up four points; 669 to 673 from last year and is only six points away from the 2007 average of 679, which is a promising sign as the economy continues to rebound. Experian’s annual study ranks American cities by credit score and reveals which cities are the best and worst at managing their credit, along with a glimpse at how the nation and each generation is faring. “All credit indicators suggest consumers are not as ‘credit stressed’ — credit card balances and average debt are up while utilization rates remained consistent at 30 percent,” said Michele Raneri, vice president of analytics and new business development at Experian. As for the generational victors, the Silents have an average 730, Boomers come in with 700, Gen X with 655 and Gen Y with 634. We’re also starting to see Gen Z emerge for the first time in the credit ranks with an average score of 631. Couple this news with other favorable economic indicators and it appears the country is humming along in a positive direction. The stock market reached record highs post-election. Bankcard originations and balances continue to grow, dominated by the prime borrower. And the housing market is healthy with boomerang borrowers re-emerging. An estimated 2.5 million Americans will see a foreclosure fall of their credit report between June 2016 and June 2017, creating a new pool of potential buyers with improved credit profiles. More than 12 percent who foreclosed back in the Great Recession have already boomeranged to become homeowners again, while 29 percent who experienced a short sale during that same time have also recently taken on a mortgage. “We are seeing the positive effects of economic recovery with the rise in income and low unemployment reflected in how Americans are managing their credit,” said Raneri. Which means all is good in the world of credit. Of course there is always room for improvement, but this year’s 7th annual state of credit reveals there is much to be thankful for in 2016.

2017 data breach landscape Experian Data Breach Resolution releases its fourth annual Data Breach Industry Forecast report with five key predictions What will the 2017 data breach landscape look like? While many companies have data breach preparedness on their radar, it takes constant vigilance to stay ahead of emerging threats and increasingly sophisticated cybercriminals. To learn more about what risks may lie ahead, Experian Data Breach Resolution released its fourth annual Data Breach Industry Forecast white paper. The industry predictions in the report are rooted in Experian's history helping companies navigate more than 17,000 breaches over the last decade and almost 4,000 breaches in 2016 alone. The anticipated issues include nation-state cyberattacks possibly moving from espionage to full-scale cyber conflicts and new attacks targeting the healthcare industry. "Preparing for a data breach has become much more complex over the last few years," said Michael Bruemmer, vice president at Experian Data Breach Resolution. "Organizations must keep an eye on the many new and constantly evolving threats and address these threats in their incident response plans. Our report sheds a light on a few areas that could be troublesome in 2017 and beyond." "Experian's annual Data Breach Forecast has proven to be great insight for cyber and risk management professionals, particularly in the healthcare sector as the industry adopts emerging technology at a record pace, creating an ever wider cyber-attack surface, adds Ann Patterson, senior vice president, Medical Identity Fraud Alliance (MIFA). "The consequences of a medical data breach are wide-ranging, with devastating effects across the board - from the breached entity to consumers who may experience medical ID fraud to the healthcare industry as a whole. There is no silver bullet for cybersecurity, however, making good use of trends and analysis to keep evolving our cyber protections along with forecasted threats is vital." "The 72 hour notice requirement to EU authorities under the GDPR is going to put U.S.-based organizations in a difficult situation, said Dominic Paluzzi, co-chair of the Data Privacy & Cybersecurity Practice at McDonald Hopkins. "The upcoming EU law may just have the effect of expediting breach notification globally, although 72 hour notice from discovery will be extremely difficult to comply with in many breaches. Organizations' incident response plans should certainly be updated to account for these new laws set to go in effect in 2017." Omer Tene, Vice President of Research and Education for International Association of Privacy Professionals, added "Clearly, the biggest challenge for businesses in 2017 will be preparing for the entry into force of the GDPR, a massive regulatory framework with implications for budget and staff, carrying stiff fines and penalties in an unprecedented amount. Against a backdrop of escalating cyber events, such as the recent attack on Internet backbone orchestrated through IoT devices, companies will need to train, educate and certify their staff to mitigate personal data risks." Download Whitepaper: Fourth Annual 2017 Data Breach Industry Forecast Learn more about the five industry predictions, and issues such as ransomware and international breach notice laws in our the complimentary white paper. Click here to learn more about our fraud products, find additional data breach resources, including webinars, white papers and videos.

The best way to increase email open rates? Include a subscriber’s name in the subject line. A recent Experian study found that in addition to higher open rates, personalized subject lines have a27% higher unique click rate, an 11% higher click-to-open rate and more than double the transaction rates of other promotional mailings from the same brands.  Other proven personalization tactics include: Customizing subject lines based on browsing behavior Dynamically populating product choices based on the past purchases of the subscriber Triggering emails based on Instagram or Pinterest selections, connecting social media choices to email opportunities In addition to personalization, companies should coordinate social media programs with email and mobile campaigns in order to optimize engagement across all channels. >> Consumer credit trends

Reinventing Identity for the Digital Age Electronic Signature & Records Association (ESRA) conference I recently had the opportunity to speak at the Electronic Signature & Records Association (ESRA) conference in Washington D.C.  I was part of a fantastic panel delving into the topic, ‘Reinventing Identity for the Digital Age.’  While certainly hard to do in just an hour, we gave it a go and the dialogue was engaging, healthy in debate, and a conversation that will continue on for years to come.  The entirety of the discussion could be summarized as: An attempt to directionally define a digital identity today The future of ownership and potential monetization of trusted identities And the management of identities as they reside behind credentials or the foundations of block chain Again, big questions deserving of big answers. What I will suggest, however, is a definition of a digital identity to debate, embrace, or even deride.  Digital identities, at a minimum, should now be considered as a triad of 1) verified personally identifiable information, 2) the collective set of devices through which that identity transacts, and 3) the transactional (monetary or non-monetary) history of that identity. Understanding all three components of an identity can allow institutions to engage with their customers with a more holistic view that will enable the establishment of omni-channel communications and accounts, trusted access credentials, and customer vs. account-level risk assessment and decisioning. In tandem with advances in credentialing and transactional authorization such as biometrics, block chain, and e-signatures, focus should also remain on what we at Experian consider the three pillars of identity relationship management: Identity proofing (verification that the person is who they claim to be at a specific point in time) Authentication (ongoing verification of a person’s identity) Identity management (ongoing monitoring of a person’s identity) As stronger credentialing facilitates more trust and open functionality in non-face-to-face transactions, more risk is inherently added to those credentials.  Therefore, it becomes vital that a single snapshot approach to traditionally transaction-based authentication is replaced with a notion of identity relationship management that drives more contextual authentication.  The context thus expands to triangulate previous identity proofing results, current transactional characteristics (risk and reward), and any updated risk attributes associated with the identity that can be gleaned. The bottom line is that identity risk changes over time.  Some identities become more trustworthy … some become less so.  Better credentials and more secure transactional rails improve our experiences as consumers and better protect our personal information.  They cannot, however, replace the need to know what’s going on with the real person who owns those credentials or transacts on those rails.  Consumers will continue to become more owners of their digital identity as they grant access to it across multiple applications.  Institutions are already engaged in strategies to monetize trusted and shareable identities across markets.  Realizing the dynamic nature of identity risk, and implementing methods to measure that risk over time, will better enable those two initiatives. Click here to read more about Identity Relationship Management.

$1.3 trillion. 41.1 million Americans. $31,590. These are the growing numbers associated with student loan debt in the United States: $1.3 trillion in outstanding student loans, spread across 41.1 million people, who are leaving college with an average balance of $31,590. The numbers are staggering, and for the first time student loan debt is playing a prominent role in a presidential election. For all of their differences, presidential nominees Hillary Clinton and Donald Trump seem to agree on one thing: student loan debt is a crushing burden. Both candidates have proposed solutions for student lending. Clinton’s “New College Compact” would allow borrowers to refinance their student loans at current rates available to students taking out new loans. She also wants to reduce interest rates on new student loans, and make it easier for borrowers to enroll in income-driven repayment programs that would cap monthly payments at 10 percent of discretionary income. Trump proposes giving more oversight to colleges to decide whether to grant loans to students based on their prospective major. The plan would also give private banks oversight over government-backed student loans—reversing a 2010 decision under President Obama to make the federal government the lender. Neither candidate, however, has outlined a solution for taming growing tuition costs. Tuition expenses are up 1,225 percent over the past 36 years, outpacing medical costs (634 percent rise) and the consumer price index (279 percent) over the same period, according to the Bureau of Labor Statistics. So it’s not surprising an Experian study shows the student loan rate has grown five percent in the past three years. What is surprising is the number of people and the average age of those people holding student loans. Experian found: 20 percent of people with a credit file hold a student loan that is being repaid or deferred. The average age of a consumer with a student loan is 37, with an average income of $47,200 compared to 53.8 and an average income is $44,500 for consumers without a student loan. The average age of a consumer with at least one deferred student loan is 32.7 with an average income of $32,900 compared to 38.7 and an average income of $53,200 for consumers with at least one non-deferred student loan. Candidate proposals aside, one thing is certain: student loan debt has a very real impact on the daily lives of people, many of whom have delayed buying homes, starting families, and saving for retirement. Until policymakers find a way to address bloated tuitions and student debt, it will take many longer to realize their dreams.

Much has been written about Millennials over the past few years, and many continue to speculate on how this now largest living generation will live, age and ultimately change the world. Will they still aspire to achieve the “American Dream” of education, home and raising a family? Do they wish for something different? Or has the “Dream” simply been delayed with so many individuals saddled with record-high student loan debt? According to a recent study by Pew, for the first time in more than 130 years, adults ages 18 to 34 were slightly more likely to be living in their parents’ home than they were to be living with a spouse or partner in their own household. It’s no secret the median age of first marriage has risen steadily for decades. In fact, a growing share of young adults may be eschewing marriage altogether. Layer on the story that about half of young college graduates between the ages of 22 and 27 are said to be “underemployed”—working in a job that hasn’t historically required a college degree – and it’s clear if nothing else that the “American Dream” for many Millennials has been delayed. So what does this all mean for the world of homeownership? While some experts warn the homeownership rate will continue to decrease, others – like Freddie Mac – believe that sentiment is overly pessimistic. Freddie Mac Chief Economist Sean Becketti says, “The income and education gaps that are responsible for some of the differences may be narrowed or eliminated as the U.S. becomes a 'majority minority' country.” Mortgage interest rates are still near historic lows, but home prices are rising far faster than incomes, negating much of the savings from these low rates. Experian has taken the question a step further, diving into not just “Do Millennials want to buy homes” but “Can Millennials buy homes?” Using mortgage readiness underwriting criteria, the bureau took a large consumer sample and assessed Millennial mortgage readiness. Experian then worked with Freddie Mac to identify where these “ready” individuals had the best chance of finding homes. The two factors that had the strongest correlation on homeownership were income and being married. From a credit perspective, 33 percent of the sample had strong or moderate credit, while 50 percent had weak credit. While the 50 percent figure is startling, it is important to note 40 percent of that grouping consisted of individuals aged 18 to 26. They simply haven’t had enough time to build up their credit. Second, of the weak group, 31 percent were “near-moderate,” meaning their VantageScore® credit score is 601 to 660, so they are close to reaching a “ready” status. Overall, student debt and home price had a negative correlation on homeownership. In regards to regions, Millennials are most likely to live in places where they can make money, so urban hubs like Los Angeles, San Francisco, Chicago, Dallas, Houston, Boston, New York and DC currently serve as basecamp for this group. Still, when you factor in affordability, findings revealed the Greater New York, Houston and Miami areas would be good areas for sourcing Millennials who are mortgage ready and matching them to affordable inventory. Complete research findings can be accessed in the Experian-Freddie Mac co-hosted webinar, but overall signs indicate Millennials are increasingly becoming “mortgage ready” as they age, and will soon want to own their slice of the “American Dream.” Expect the Millennial homeownership rate of 34 percent to creep higher in the years to come. Brokers, lenders and realtors get ready.

Consumer card balance transfer activity is estimated to be $35 billion to $40 billion a year. How do lenders identify these consumers before they make transfers? By using trended data.  While extremely valuable, trended data is very complex and difficult to work with. For example, with 24 months of history on five fields, a single account includes 120 data points. That’s 720 data points for a consumer with six accounts on file and 72 million for a file with 100,000 consumers — not to mention the other data fields in the file. Trended data allows lenders to effectively predict where a consumer is going based on where they’ve been. And that can make all the difference when it comes to smart lending decisions. >>What is trended data?

Fraudsters invited into bank branches The days of sending an invitation in the mail have for the most part gone by the wayside. Aside from special invitations for weddings and milestone anniversaries, electronic and email invitations have become the norm. However, one major party planner has refused to change practices — banks inviting fraudsters into their banking centers. As a fraud consultant I have the privilege of meeting many banking professionals, and I hear the same issues and struggles over and over again. It’s clear that the rapid increase of fraudulent account-opening applications are top of mind to many. What the executives making policy don’t realize is they’re facing fraud because they’re literally inviting the fraudsters into their branches. Think I’m exaggerating? Let me explain. I often encounter bank policymakers who explain their practice of directing a suspicious person into a banking center. Yes, many banks still direct applicants who cannot be properly verified over the phone or online into their banking center to show proof of identity. Directing or inviting criminals into your bank instead of trying to keep them out is an outdated, high-risk practice — what good can possibly come of it? The argument I typically hear from non-fraud banking professionals: “The bad guys know that if they come into the bank we will have them on film.” Other arguments include that the bad guys are not typically bold enough to actually come into the banking center or that their physical security guards monitor high-traffic banking centers. But often that is where bank policies and employee training ends. Based on my years of experience dealing with banks of all sizes, from the top three global card issuers to small regional banks, let me poke a few holes in the theory that it is a good deterrent to invite perpetrators into your banking center. Let’s role-play how my conversation goes: Me: “When an underwriter with limited fraud training making the decision to direct a suspicious applicant into a banking center, what is the policy criteria to do so?” Bank policymaker: (typical response) “What do you mean?” Me: “What high-risk authentication was used by the underwriter to make the decision to extend an invitation to a high-risk applicant to come into the banking center? If the applicant failed your high-risk authentication questions and you were not able to properly identify them, what authentication tools do the branch managers have that the underwriters do not?” Bank: “Nothing, but they can usually tell when someone is nervous or seems suspicious.” Me: “Then what training do they receive to identify suspicious behaviors?” (You guessed it …) Bank: “None.” (I then switch to the importance of customer experience.) Me: “How do you notify the banking center in advance that the suspicious applicant was invited to come in to provide additional verification?” Bank: “We do not have a policy to notify the banking center in advance.” Me: “What is considered acceptable documentation? And are banking center employees trained on how to review utility statements, state ID cards, drivers’ licenses or other accepted media?“ Bank: “We do not have a list of acceptable documentation that can be used for verification; it is up to the discretion of the banking center representative.” Me: “How do you ensure the physical safety of your employees and customers when you knowingly invite fraudsters and criminals into your banking center? How do you turn down or ask the suspicious person to leave because they do not have sufficient documentation to move forward with the original application for credit? If a suspicious person provides your employee with a possible stolen identification card, is that employee expected to keep it and notify police or return it to the applicant? Are employees expected to make a photocopy of the documentation provided?” The response that I usually receive is, “I am not really sure.” I hope by now you are seeing the risk of these types of outdated practices on suspicious credit applications. The fact is that technology has allowed criminals to make fairly convincing identification at a very low cost. If employees in banking centers are not equipped, properly trained, and well-documented procedures do not exist in your fraud program — perhaps it’s time to reconsider the practice or seek the advice of industry experts. I have spent two decades trying to keep bad guys out of banks, but I can’t help but wonder — why do some still send open invitations to criminals to come visit their bank? If you are not yet ready to stop this type of bad behavior, at the very least you must develop comprehensive end-to-end policies to properly handle such events. This fraud prevention tactic to invite perpetrators into banks was adopted long before the age of real-time decisions, robust fraud scores, big data, decision analytics, knowledge-based authentication, one-time passcodes, mobile banking and biometrics. The world we bank in has changed dramatically in the past five years; customers expect more and tolerate less. If a seamless customer experience and reducing account-opening and first-party fraud are part of your strategic plan, then it is time to consider Experian fraud solutions and consulting.

Time heals countless things, including credit scores. Many of the seven million people who saw their VantageScore® credit scores drop to sub-prime levels after suffering a foreclosure or short sale during the Great Recession have recovered and are back in the housing market. These Boomerang Buyers — people who foreclosed or short sold between 2007 and 2014 and have opened a new mortgage — will be an important segment of the real estate market in the coming years. According to Experian data, through June 2016 roughly 800,000 people had boomeranged, with Los Angeles, Phoenix, and Sacramento housing the most buyers. Some analysts believe more than three million Americans will become eligible for a home over the next three years. Are potential Boomerang Buyers a great opportunity to boost market share or a high risk for a portfolio? Early trends are positive. The majority of Boomerang Buyers who opened mortgages between 2011 and June 2016 are current on their debts. An Experian study revealed more than 29 percent of those who short sold have boomeranged, and just 1.5 percent are delinquent on their mortgage —falling below the national average of 2.8 percent. This group is also ahead of or even with the national average for delinquency on auto loans (1.2 percent vs. the national average of 2.2 percent), bankcards (3 percent vs. 4.3 percent) and retail (even at 2.7 percent). For those Boomerang Buyers who had foreclosed, the numbers are also strong. More than 12 percent have boomeranged, with just 3 percent delinquent on their mortgage. They also match or are below national average delinquency rates on auto loans (1.9 percent) and bankcards (4.1 percent), and have a slightly higher delinquency rate for retail (3.5 percent). Due to their positive credit behaviors, Boomerang Buyers also have higher VantageScore® credit scores than before. On average, the overall non-boomerang group’s credit score sunk during a foreclosure but went up 10 percent higher than before the foreclosure, and Boomerang Buyers rose by nearly 14 percent. For people who previously had a prime credit score, their number dropped by nearly 5 percent, while those who boomeranged returned to the score they had prior to the foreclosure. By comparison, the overall non-boomerang and boomerang group saw their credit score drop during a short sale and increase more than 11 percent from before the short sale. For people who previously had prime credit, they dropped 2 percent while those who boomeranged were almost flat to where they were before the short sale. Another part of the equation is the stabilized housing market and relatively low loan-to-value (LTV) limits that lenders have maintained. In the past, borrowers most often strategically defaulted on their mortgages when their LTV ratios were well over 100 percent. So as long as lenders maintain relatively low LTV limits and the housing market remains strong, strategic default is unlikely to re-emerge as a risk.

We are excited to announce that Experian Fraud and Identity Solutions is presenting at FinovateFall 2016!  Finovate conferences showcase cutting-edge banking and financial technology in a unique demo-only format. Held twice a year, the conferences bring together the leaders from top financial institutions, fintech companies, investors from around the globe, and fintech media to share and promote the most innovative financial technology solutions. "Experian’s Fraud and Identity Solutions is a leader in customer-centric identity and fraud solutions, providing fraud management solutions to some of the world’s largest brands in financial services, insurance, and retail," said Adam Fingersh, general manager and senior vice president of Fraud and Identity Solutions in North America. "We will introduce our Fraud and Identity Solutions and promote our newly released CrossCore platform. CrossCore puts more control in the hands of fraud teams to adapt and deploy strategies that keep up with the pace of fraud while reducing burdens on IT and data science teams." Fingersh and John Sarreal, senior director of Fraud and Identity product management at Experian, are presenting the 7-minute demo focusing on the key CrossCore capabilities, and how CrossCore manages fraud and identity services through its flexible API; open, plug-and-play platform; and powerful workflow and strategy design capabilities. In Forrester’s 2016 “Vendor Landscape: Mobile Fraud Management”, Experian Fraud and Identity Solutions was cited as having the most capabilities and one of the highest estimated revenues in total fraud management in the market, between $200 million and $250 million. Join us for the event on September 8-9 in New York. Experian also has an exclusive 20% off discount code (Experian20FF16) to get even more savings! For more information on the event or to view videos of previous demos, please visit finovate.com.

New industry report highlights the convergence of business growth and fraud prevention strategies Experian has published its first annual global fraud report covering the convergence of growth strategies and fraud prevention. The report, Global Business Trends: Protecting Growth Ambitions Against Rising Fraud Threats, is designed as a guide for senior executives and fraud prevention professionals, offering new insights on how the alignment of strategies for business growth and fraud prevention can help a business grow revenues while managing risks in an increasingly virtual world. The report identifies five trends that businesses should assess and take action on to mitigate fraud and improve the customer experience in today's fast-paced, consumer-centric environment: Applying right-sized fraud solutions to reduce unnecessary customer disruption: It's time to move on from a one-size-fits-all approach that creates more customer friction than necessary. Instead, companies should apply fraud solutions that reflect the value and level of confidence needed for each transaction. This means right-sizing your fraud solutions to align with true fraud rates and commercial strategy. Having a universal view of the consumer is the core of modern fraud mitigation and marketing: Achieving a universal profile of consumer behavior — beyond the traditional 360-degree view — requires access to a combination of identity data, device intelligence, online behavior, biometrics, historical transactions and more, for consumer interactions not only with you, but across other businesses and industries as well. Companies that translate this knowledge and use it to identify consumers can distinguish a fraudster from a real customer more easily, building trust along the way. Expanding your view through a blended ecosystem: In addition to using your own first-party data sources, companies need to participate in a blended ecosystem, working across businesses and even industries. Fraudsters have access to more data than ever before, including data traditionally used to verify identities, and they use that data to create an entire digital profile. Therefore, you can no longer get to the digital interaction data you need by managing the process in a siloed manner. Achieving an expansive view of the universal consumer requires multiple data sources working together. Achieving agility and scale using service-based models: Today, more and more companies are choosing subscription-based systems rather than building in-house or implementing on-premise solutions. Continuous upgrades and the access to new risk logic that come with subscription models provide more agility and faster response to emerging threats, no matter how fast your volume grows or what products, channels or geographies you pursue. Future-proofing fraud solution choices: Companies need access to a wide variety of traditional and emerging technologies and information sources to fill in knowledge gaps and blind spots where fraudsters try to hide. The ability to modify strategies quickly and catch fraud faster while improving the customer experience is a critical aspect of fraud prevention moving forward. Bringing together these key trends, the report provides business leaders with the insight they need to fight fraud using the same consumer-focused approach currently being used to attract new customers and grow revenue. "There is a persistent mindset that fraud loss is just the cost of doing business," said Steve Platt, global EVP, Fraud and Identity, Experian. "But as fraudsters evolve, those losses are climbing, and the status quo is no longer effective or acceptable. We all need to be as forward-looking in fighting fraud as we are in business operations and marketing, and a real understanding of consumers is critical for success. We're talking about the convergence of business growth and fraud prevention, and we're pleased to provide the first report in the marketplace covering this topic." Download the full report here. The report also features an interactive Fraud Prevention Benchmark tool that companies can use to explore how these trends impact their business and how the performance of their approach measures up against industry practices. The report is relevant to functions spanning the enterprise, including C-suite executives such as chief marketing officers (CMOs), chief risk officers (CROs) and chief data officers (CDOs). The report focuses on business processes where fraud infiltrates, including new account opening, account access, money movement transactions, and emerging trends combating fraud, such as advanced fraud analytics. In each area, the report details how multiple business functions can apply responses to create business growth. Steve Platt added: "We hear from our clients that they are most successful when CMOs along with CDOs and CROs all work together to understand the customer and develop fraud management solutions that create a better overall experience." Experian was recently cited in Forrester's 2016 Vendor Landscape: Mobile Fraud Management Solutions1 report and listed as having nine out of a possible 10 capabilities needed to combat mobile fraud. Experian was also identified as one of three leading players in the fraud detection and prevention space in a new study from Juniper Research.2 Experian applied best practices to create a global report on providing fraud management solutions that allow companies to maximize profitability while providing secure, hassle-free customer interactions. Learn more about Experian’s Fraud and Identity business. 1Vendor Landscape: Mobile Fraud Management Solutions, Forrester Research, Inc., June 2016. 2Online Payment Fraud: Key Vertical Strategies & Management 2016–2020, Juniper Research, June 2016.

His car, more than 10 years old and not worth salvaging, was in the shop again. Time to invest in something new – or at least “new-ish.” He headed to a local dealership, selected a practical model and applied for financing. “We can’t give you a loan,” said the manager. “Your income is not high enough, but perhaps if you bring in a co-signer ...” Denied. Her college degree hung on the wall of her childhood bedroom. In the months since she celebrated graduation with family and friends, she landed a job, but not one providing enough income to cover rent, a car payment and her hefty student loan payments. “I didn’t realize my payments would be so high,” said the woman. “I don’t know how I’ll ever climb out from under this debt and start my life.” Stalled. His attempt at applying for a bankcard, much needed to begin the journey of establishing credit in the country, was met with failure. “We can’t find any credit history on you,” says the lender. “Try again in the future.” Invisible. These stories are all too common in America. A lack of financial education, coupled with a few poor choices, can derail an individual’s financial trajectory. More light has certainly been shone on the topic of financial education and the importance of making smart credit decisions from a young age, but there is no nationwide financial education program offered in schools, and many parents feel ill-equipped to handle the task. Consider a few of these numbers: 71 percent of college grads recently surveyed by Experian said they did not learn about credit and debt management in college, giving their schools an average grade of “C” when it comes to preparing them to manage credit and debt after college The latest "State of Credit" revealed the average debt per consumer is $29,093 39 percent of newlyweds say credit scores is a source of stress in their marriage Money management is tough, and we expect people to just figure it out. But clearly, that’s not working. So we need to think about the world of credit differently. As Experian says, we need to treat it as a skill. We need to practice and learn and adjust. As you get better at credit, it opens doors, creates opportunities, and enables people to live the lives they wish to live. Suddenly, you can get the car loan, move out, have access to credit cards, and manage it all responsibly. In other words, you claim financial health. On the other hand, if you don’t work at this skill, a lack of financial health ensues. Unruly amounts of debt, irregular income and sporadic savings create stress, resentment and pain. Increasingly, more financial institutions are boosting efforts to educate about credit. Schools are exploring curriculum to talk finances and inject real-life money management scenarios into everyday lessons. Millennials are seeking transparency around credit transactions. The more financially healthy consumers we have in this country, building credit skills, means overall economies will grow. So yes, financial health matters. It matters to individuals, to lending institutions, to retailers and to communities big and small. Building those credit skills is essential. Your health depends on it.

Is the speed of fraud threatening your business? Like many other fraud and compliance teams, your teams may be struggling to keep up with new business dynamics. The following trends are changing the way consumers do business with you: 35 percent year-over-year growth in mobile commerce More than $27 billion forecasted value of mobile payment transactions in 2016 45 percent of smartphone owners using a mobile device to make a purchase every month More than 1 billion mobile phone owners will use their devices for banking purposes by the end of 2015 In an attempt to stay ahead of fraud, systems have become more complex, more expensive and even more difficult to manage, leading to more friction for your customers. How extensive is this impact? 30 percent of online customers are interrupted to catch one fraudulent attempt One in 10 new applicants may be an imposter using breached data $40 billion of legitimate customer sales are declined annually because of tight rules, processes, etc. This rapid growth only reinforces the need for aggressive fraud prevention strategies and adoption of new technologies to prepare for the latest emerging cybersecurity threats. Businesses must continue their efforts to protect all parties’ interests. Fraudsters have what they need to be flexible and quick. So why shouldn’t businesses? Introducing CrossCore™, the first smart plug-and-play platform for fraud and identity services. CrossCore uses a single access point to integrate technology from different providers to address different dangers. When all your fraud and identity solutions work together through a single application program interface, you reduce friction and false positives — meaning more growth for your business. View our recent infographic on global fraud trends

On June 2, the Consumer Financial Protection Bureau (CFPB) proposed a rule aimed at “payday lending” that will apply to virtually all lenders, with request for comments by Sept. 14. Here is a summary of the basic provisions of the proposed rule. However, with comments, the proposal is more than 1,300 pages in length, and the proposed rule and examples are more than 200 pages long. It is necessary to review the details of the proposed rule to understand its potential impact on your products and processes fully. You may wish to review your current and future offerings with your institution’s counsel and compliance officer to determine the potential impact if major provisions of this proposed rule are finalized by the CFPB. Coverage The proposal generally would cover two categories of loans. First, the proposal generally would cover loans with a term of 45 days or less. Second, the proposal generally would cover loans with a term greater than 45 days, provided that they have an all-in annual percentage rate greater than 36 percent and either are repaid directly from the consumer’s account or income or are secured by the consumer’s vehicle. Ability to repay For both categories of covered loans, the proposal would identify it as an abusive and unfair practice for a lender to make a covered loan without reasonably determining that the consumer has the ability to repay the loan. Or if the lender does not determine if the consumer can make payments due, as well as meet major financial obligations and basic living expenses during and for 30 days after repayment. Lenders would be required to verify the amount of income that a consumer receives, after taxes, from employment, government benefits or other sources. In addition, lenders would be required to check a consumer’s credit report to verify the amount of outstanding loans and required payments. “Safe Harbor” The proposed rule would provide lenders with options to make covered loans without satisfying the ability-to-repay and payment notice requirements, if those loans meet certain conditions. The first option would be offering loans that generally meet the parameters of the National Credit Union Administration “payday alternative loans” program, where interest rates are capped at 28 percent and the application fee is no more than $20. The other option would be offering loans that are payable in roughly equal payments with terms not to exceed two years and with an all-in cost of 36 percent or less, not including a reasonable origination fee, so long as the lender’s projected default rate on these loans is 5 percent or less. The lender would have to refund the origination fees any year that the default rate exceeds 5 percent. Lenders would be limited as to how many of either type of loan they could make per consumer per year. Outstanding loans The proposal also would impose certain restrictions on making covered loans when a consumer has — or recently had — certain outstanding loans. These provisions are extensive and differ between short- and long-term loans. For example: Payday and single-payment auto title: If a borrower seeks to roll over a loan or returns within 30 days after paying off a previous short-term debt, the lender would be restricted from offering a similar loan. Lenders could only offer a similar short-term loan if a borrower demonstrated that their financial situation during the term of the new loan would be materially improved relative to what it was since the prior loan was made. The same test would apply if the consumer sought a third loan. Even if a borrower’s finances improved enough for a lender to justify making a second and third loan, loans would be capped at three in succession followed by a mandatory 30-day cooling-off period. High-cost installment loans: For consumers struggling to make payments under either a payday installment or auto title installment loan, lenders could not refinance the loan into a loan with similar payments. This is unless a borrower demonstrated that their financial situation during the term of the new loan would be materially improved relative to what it was during the prior 30 days. The lender could offer to refinance if that would result in substantially smaller payments or would substantially lower the total cost of the consumer’s credit. Payments Furthermore, it would be defined as an unfair and abusive practice to attempt to withdraw payment from a consumer’s account for a covered loan after two consecutive payment attempts have failed, unless the lender obtains the consumer’s new and specific authorization to make further withdrawals from the account. The proposal would require lenders to provide certain notices to the consumer before attempting to withdraw payment for a covered loan from the consumer’s account unless exempt under one of the “safe harbor” options. Registered information systems Finally, the proposed rule would require lenders to use credit reporting systems to report and obtain information about loans made under the full-payment test or the principal payoff option. These systems would be considered consumer reporting companies, subject to applicable federal laws and registered with the CFPB. Lenders would be required to report basic loan information and updates to that information. The proposed regulation may be found here.

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