Accuracy matters. It matters in dart throwing, math calculations, and now more than ever, in data reporting. The Consumer Financial Protection Bureau (CFPB) issued a bulletin on Feb. 3 warning banks and credit unions that if they fail to meet accuracy obligations when reporting negative account histories to credit reporting companies, the result could be bureau action. As noted in the Fair Credit Reporting Act (FCRA) section 623, data furnishers have an obligation to ensure the accuracy of the information furnished to a Credit Reporting Agency (CRA). Violation of these rules presents a variety of risks, and the regulatory agencies have enforced harsh consequences. Avoiding penalties is certainly a strong incentive for data furnishers to implement a formal compliance management system and data quality program. But there are additional benefits to ensuring accuracy – most notably keeping customers happy and loyal, and maintaining a reputable brand in the marketplace. Today’s consumers increasingly understand the impact of credit scoring and data reporting, and recognize a poor credit score can impact their lives in major ways. Credit is tied to so many milestone financial moments. Securing mortgage loans, auto loans, obtaining low-interest rate interest credit cards and securing private student loans can all be derailed with an unfavorable and inaccurate credit report. Not to mention credit reports can influence one’s eligibility for rental housing, setting premiums for auto and homeowners insurance in some states, or determining whether to hire an applicant for a job. To properly serve customers who simply expect a fair and accurate representation of their financial history, data furnishers must be able to guarantee the credibility of their reported data. Those organizations that cannot ensure accuracy put their reputation at risk and may lose a customer’s trust and business. “Consumers should not be sidelined out of the basic banking services they need because of the flaws and limitations in a murky system,” Cordray said in the bulletin. “People deserve to have more options for access to lower-risk deposit accounts that can better fit their needs.” The CFPB has handled more than 105,000 credit-reporting complaints in its short history, making credit reporting the third most-complained-about consumer issue. By far the most common types of credit-reporting issues identified by consumers is incorrect information on credit report (77 percent).* Certainly these mistakes are not made intentionally. But speak to a consumer battling an inaccuracy, especially someone in the midst of applying for credit for a specific need, and frustrations can soar quickly. All lenders are advised to maintain a full 360-degree view of data reporting, from raw data submissions to the consumer credit profile. Better data input equals fewer inaccuracies. Additionally, there are comprehensive reporting solutions available to assess the accuracy of consumer credit data. The regulatory environment will without a doubt continue to be a hot topic in the media, fueled by announcements such as these by the CFPB, so lenders should take note and identify processes to ensure complete and utter accuracy. It matters in so many ways, so it’s best to make data reporting a priority now, if it’s not already. Source: CFPB August 2015 Monthly Complaint Report

According to the latest Experian–Oliver Wyman Market Intelligence Report, HELOC originations came in at $43 billion for Q4 2015 — a 22% increase over Q4 2014. HELOC originations for all of 2015 totaled $160 billion — a 21% increase year over year. As HELOC originations continue their growth trend, lenders can stay ahead of the competition by using advanced analytics to target the right customers and increase profitability. >> Revamp your mortgage and HELOC acquisitions strategies

Understanding the behaviors of best-in-class credit risk managers For financial institutions to achieve superior performance, having the appropriate set of credit risk managers is a prerequisite. The ability to gain insight from data and customer behavior and to use that insight for strategic advantage is a critical ingredient for success. At the same time, the risk-management community is under increasing pressure to understand and explain underlying trends in credit portfolios — and to monitor, interpret and explain these trends with ever-greater accuracy. A common problem financial institutions face when confronting staff resource needs is the difficulty in recruiting and retaining experienced risk-management professionals. The risk-management community is notoriously small, and hiring expertise from within this community is extremely difficult. Skilled risk managers truly are a finite resource, but their skill set is in huge demand. Hiring the right talent is crucial to job satisfaction, leading to higher engagement levels and reduced attrition costs. On top of that, employee engagement is vital to an organization’s success. It drives employee productivity and fosters a culture of innovation, which leads to higher profitability for the entire organization. Building, attracting and retaining risk-management resources requires a commitment to engaging in staff personal development. A great way to support employee engagement is to invest in their personal and professional development, including opportunities for training and team building. If an organization can show that it is committed to developing its people and providing opportunities for career growth, employee engagement levels will rise, with all the benefits this entails. Typically, financial institutions bridge the resource skill gap by either hiring skilled statistical and analytical experts or developing in-house resources. Both of these approaches, however, require significant on-the-job training to teach employees how to link raw statistical techniques and procedures to influencing the profit and loss statement of the business line which they support. The challenge is often broadening the understanding of these skill set “silos” and their contribution to the overall portfolio. By opening that view, the organization generates additional value from these resources as lines of communication are improved and insights and opportunities found within the data are shared more effectively across the organizational team. Experian’s Global Consulting Practice provides a solution to this problem. Our two-day Risk and Portfolio Management Essentials training workshop offers the opportunity to understand the behaviors of best-in-class risk managers. What are the tools and enablers required for the role? How do they prepare for the process of managing credit risk? What areas must risk managers consider managers across the Customer Life Cycle? What differentiates the good from the great? To complement the training modules, Experian® offers an interactive, team-based approach that engages course participants in the build options of a defined portfolio. Participants leverage the best-in-class techniques presented in the sessions in a series of competitive, team-based exercises. This set of cross-organizational exercises drives home the best-in-class techniques and further builds understanding that resonates across the organization long after the course is concluded. For our current offerings, locations and to register click here.  

What is blockchain? Blockchain is beginning to get a lot of attention, so I thought it might be time to figure out what it is and what it means. Basically, a blockchain is a permissionless, distributed database that maintains a growing list of records (transactions) in a linear, chronological (and time-stamped) ledger. At a high level, this is how it works. Each computer connected to the network gets a copy of the entire blockchain and performs the task of validating and relaying transactions for the whole chain. The batches of valid transactions added to the record are called “blocks.” A block is the “current” part of a blockchain that records some or all of the recent transactions and once completed goes into the blockchain as a permanent database. Each time a block gets completed, a new block is created, with every block containing a hash of the previous block. There are countless numbers of blocks in the blockchain. To use a conventional banking analogy, the blocks would be a full history of every banking transaction for every person, and the blockchain would be a complete banking history. The entire blockchain is sent to everyone who has access, and every user validates the information in the block. It’s like if Tom, Bob and Harry were standing on the street corner and saw a cyclist hit by a car. Individually, all three men will be asked if the cyclist was struck by the car, and all three will respond “yes.” The cyclist being hit by the car becomes part of the blockchain, and that fact cannot be altered. Blockchain generally is used in the context of bitcoin, where similar uses of the structure are called altchains. Why should I care or, at the very least, pay attention to this movement? Because the idea of it is inching toward the tipping point of mainstream. I recently read an article that identified some blockchain trends that could shape the industry in coming months. The ones I found most interesting were: Blockchain apps will be released Interest in use cases outside payments will pick up Consortia will prove to be important Venture capital money will flow to blockchain start-ups While it’s true that much of the hype around blockchain is coming from people with a vested interest, it is beginning to generate more generalized market buzz as its proponents emphasize how it can reduce risk, improve efficiency and ultimately provide better customer service. Let’s face it, the ability to maintain secure, fast and accurate calculations could revolutionize the banking and investment industries, as well as ecommerce. In fact, 11 major banks recently completed a private blockchain test, exchanging multiple tokens among offices in North America, Europe and Asia over five days. (You can read The Wall Street Journal article here.) As more transactions and data are stored in blockchain or altchain, greater possibilities open up. It’s these possibilities that have several tech companies, like IBM, as well as financial institutions creating what has become known as an open ledger initiative to use the blockchain model in the development of new technologies that will enable a wider array of services. There is no doubt that the concept is intriguing — so much so that even the SEC has approved a plan to issue stock via blockchain. (You can read the Wired article here.) The potential is enough to make many folks giddy. The idea that risk could become a thing of the past because of the blockchain’s immutable historical record — wow. It’s good to be aware and keep an eye on the open ledger initiative, but let’s not forget history, which has taught us that (in the wise words of Craig Newmark), “Crooks are early adopters.” Since blockchain’s original and primary usage has been with bitcoin, I don’t think it is unfair to say that there will be some perceptions to overcome — like the association of bitcoin to activities on the Dark Web such as money laundering, drug-related transactions and funding illegal activities. Until we start to see the application across mainstream use cases, we won’t know how secure blockchain is or how open business and consumers will be to embracing it. In the meantime, remind me again, how long has it taken to get to a point of practical application and more widespread use of biometrics? To learn more, click here to read the original article.  

According to a recent Experian Marketing Services study, 36% of companies interact with customers in five or more channels.

Ensure you’re protecting consumer data privacy Data Privacy Day is a good reminder for consumers to take steps to protect their privacy online — and an ideal time for organizations to ensure that they are remaining vigilant in their fight against fraud. According to a new study from Experian Consumer Services, 93 percent of survey respondents feel identity theft is a growing problem, while 91 percent believe that people should be more concerned about the issue. Online activities that generate the most concern include making an online purchase (73 percent), using public Wi-Fi (69 percent) and accessing online accounts (69 percent). Consumers are vigilant while online Most respondents are concerned they will fall victim to identity theft in the future (71 percent), resulting in a generally proactive approach to protecting personal information. In fact, almost 50 percent of respondents say they are taking more precautions compared with last year. Ninety-one percent take steps to secure physical information, such as shredding documents, while also securing digital information (using passwords and antivirus software). Many consumers also make sure to check their credit report (33 percent) and bank account statements (76 percent) at least once per month. There’s still room for consumers to be safer Though many consumers are practicing good security habits, some aren’t: More than 50 percent do not check to see if a Website is secure Fifty percent do not have all their Web-enabled devices password-protected because it is a hassle to enter a password (30 percent) or they do not feel it is necessary (25 percent) Fifty-five percent do not close the Web browser when they are finished using an online account Additionally, 15 percent keep a written record of passwords and PINs in their purse or wallet or on a mobile device or computer Businesses need to be responsible when it comes data privacy  Customer-facing businesses must continue efforts to educate consumers about their role in breach and fraud prevention. They also need to be responsible and apply comprehensive, data-driven intelligence that helps thwart both breaches and the malicious use of breached information and protect all parties’ interests. Nearly 70 percent of those polled in a 2015 Experian–Ponemon Institute study said that the increased visibility and media reporting of breaches, including payment-related incidents, have caused their organizations to step up data security efforts. Experian Fraud & ID is uniquely positioned to provide true customer intelligence by combining identity authentication with device assessment and monitoring from a single integrated provider. This combination provides the only true holistic view of the customer and allows organizations to both know and recognize customers and to provide them with the best possible experience. By associating the identities and the devices used to access services, the true identity can be seen across the customer journey. This unique and integrated view of identity and device delivers proven superior performance in authentication, fraud risk segmentation and decisioning. For more insights into how businesses are responding to breach activities, download our recent white paper, Data confidence realized: Leveraging customer intelligence in the age of mass data compromise. For more findings from the study, view the results here.

Who will take the coveted Super Bowl title in 2016? Now that we’re down to the final two teams, the commentary will heighten. Sportscasters, analysts, former athletes, co-workers ... even your local barista has an opinion. Will it be Peyton Manning's Denver Broncos or the rising Carolina Panthers? Millions will make predictions in the coming weeks, but a little research can go a long way in delivering meaningful insights. How have the teams been trending over the season? Are there injuries? Who is favored and what’s the spread? Which quarterback is leading in pass completions, passing yards, touchdowns, etc.? Who has been on this stage before, ready to embrace the spotlight and epic media frenzy? The world of sports is filled with stats resulting from historical data. And when you think about it, the world of credit could be treated similarly. Over the past several years, there has been much hype about “credit invisibles” and the need to “score more.” A traditional pull will likely leave many “no-file” and “thin-file” consumers out, so it’s in a lender’s best interest to leverage alternative scoring models to uncover more. But it’s also important to remember a score is just a snapshot, a mere moment in time. How did a consumer arrive to that particular score pulled on any given day? Has their score been trending up or down? Has an individual been paying off debt at a rapid pace or slipping further behind?   Two individuals could have the exact same score, but likely arrived to that place differently. The backstory is good to know – in sports and in the world of credit. Trended data can be attached to balances, credit limits, minimum payment due, actual payment and date of payment. By assessing these areas on a consumer file for 24 months, more insights are delivered and lenders can take note of behavior patterns to assist with risk assessment, marketing and share-of-wallet analysis. For example, looking closer at those consumers with five trades or more, Experian trended data reveals: 27% are revolvers, carrying balances each month 27% are transactors, paying off large portions, or all of their balances 9% are rate surfers, who tend to frequently transfer balances to credit cards with 0% or low introductory rates. Now these consumers can be viewed beyond a score. Suddenly, lenders can look within or outside their portfolio to understand how consumers use credit, what to offer them, and assess overall profitability. In short, trended data provides a more detailed view of a borrower’s historical credit performance, and that richness makes for a more informed decision. Without a doubt, there is power in the score – and being able to score more – but when it comes time to place your bets, the trended data matters, adding a whole new dimension to an individual’s credit score. Place your wagers accordingly. As for who will win Super Bowl 2016? I haven’t a clue. I’m more into the commercials. And I hear Coldplay is on for the half-time show. If you’re betting, best of luck, and do your homework.

With the rapid growth in the number of online marketplace lenders , and projections the field will continue to grow in 2016, winning the race to greater revenue and profitability is key to survival. In 2014, online marketplace lenders issued loans totaling around $12 billion in the United States. In a recent report, Morgan Stanley said it expects the U.S. number to grow to $122 billion by 2020, and the global number will surpass $280 billion in the same time period. Investors fear growth in acquisition costs will erode profitability as more online marketplace lenders enter the market. And as portfolios grow, there will be a need for greater sophistication as it pertains to managing accounts. Online marketplace lenders use a variety of different models to generate revenue including charging interest, loan origination and other service fees. However, regardless of the model, there are typically three key levers all should monitor in order to increase their odds for a profitable and sustainable future. 1. Cost per Account (CPA) CPA is more than a simple calculation spreading marketing cost across new account volume. Rather, it is a methodical evaluation of individual drivers such as channel lead cost, success rates, identity verification and cost of marketing collateral. When measured and evaluated at the granular lever, it is possible to make the most informed strategic decisions possible. Marketplace lenders will have to go much deeper than simply evaluating lead costs, clicks, completed and accepted applications, and funding/activation including whether customers take the loan proceeds or use a revolving product. Don’t forget ID verification and the costs associated with risk mitigation and determining if the low-risk customers are deciding to apply elsewhere. In addition, take into account marketing costs including collateral and channel strategies including any broadcast media, direct mail, web and social media expenses. Evaluate results across various product types – and don’t forget to take into account web content and layout, which can impact all metrics. 2. First Pay Default (FPD) FPD is not a long-term loan performance measure, but it is a strong indicator of lead source and vintage quality. It will most closely correlate to long-term loan performance in short-term loans and non-prime asset classes. It is also a strong indicator of fraud. The high value of online loans, combined with the difficulty of verifying online applicants, is making online lenders a prime target for fraud, so it is essential to closely monitor FPD. Online lenders’ largest single cost category is losses from unpaid loans with fraud serving as a primary driver of that number. It is important to evaluate FPD using many of the same segments as CPA. Online lenders must ask themselves the tough questions. Is a low-cost lead source worthwhile? Did operational enhancements really improve the customer experience and credit quality? 3. Servicing Online account servicing is generally the least costly means of servicing customers, an obvious advantage for online marketplace lenders. However, a variety of factors must be considered when determining the servicing channels to use. These include avoidance of customer backlash and regulatory scrutiny, servicing channel effectiveness in providing feedback regarding product design and administration, servicing policies and marketing collateral. Already, we know the legal and regulatory landscape will evolve as policy makers assess the role of marketplace lending in the financial system, while a recent federal appeals court ruling increases the risk that courts could deem some loans void or unenforceable, or lower the interest rates on them. An effective customer complaint escalation policy and process must also be created and allow for situations when the customer is not “right.” Voice of the customer (VOC) surveys are an effective method of learning from the customer and making all levels of staff know the customer better, leading to more effective marketing and account servicing. Lastly, online lenders can’t ignore social media. They should be prepared for customers, especially millennials, to use it as a means to loudly complain when dissatisfied. But also remember that the same media can be an excellent medium for two-way engagement and result in creating raving fans. A Final Consideration As online marketplace lenders continue to come of age, they are likely to find themselves facing increased competition from incumbent consumer lenders, so optimizing for profitability will be essential. Assessing these three key areas regularly will help in that quest and establish their business for a sustainable future. For more information, visit www.experian.com/marketplacelending.

For marketers, the start of a new year is an opportunity to look ahead.

Attract and retain high-value demand deposit accounts The excitement of the new year has ended, and now the big question remains: What will 2016 hold for our market and the economy? So far, we’ve seen this election year bring a volatile financial market: The Federal Reserve increased short-term interest rates by 25 basis in December, and there is uncertainty if and when future increases will come China’s gross domestic product is forecasted at 6.5 percent, the lowest in a quarter century The Dow Jones industrial average is down 10 percent to start the year, signaling a lot of uncertainty for banks and consumers It’s hard to find answers in a shifting financial landscape with a long list of mixed signals. The average consumer is looking on and wondering if we face another Great Recession or if the current economy is spiking a fever just before it is completely cured. The reality, for those of us in the banking industry, is that the modest economic recovery is likely to continue as part of a new normal pattern. In 2016, banks that remain competitive in a more digital world will be those that have frictionless products and processes to attract and retain high-value, highly sought-after consumer deposits and loans. Banks should expect the competition for deposits to intensify, and they will need to ensure that new deposit customers are on boarded effectively and cross-sold loan products quickly to reduce first-year attrition. Cross-selling at the point of origination for the demand deposit account (DDA) customers is the best way to ensure that new customers keep the institution as their primary bank. Financial institutions can exceed consumer expectations and ensure a competitive business model by leveraging modernized technology capabilities fully in combination with making relevant decisions to deliver consumer-friendly experiences. First-year DDA attrition rates will demonstrate how the consumer’s expectations were met and if the new bank got the account-opening process right or wrong. Experian® suggests three capabilities clients should consider: A deposits technology platform that offers frictionless change to data, origination strategies and instant cross-sell to loan products that yield sticky customers Strategies that comply with current and evolving regulatory demands, such as those being sought by the Consumer Financial Protection Bureau (CFPB) Business planning to identify execution gaps and a road map to ensure that gaps are addressed, confirming continued competitive ability to attract high-value deposit and loan customers DDA-account opening effectiveness can be achieved by using a consumer’s life stage, affordability considerations, unique risk profile and financial needs to on board optimally and grow those high-value consumers effectively and efficiently. Financial institutions that are nimble and fast adopters of these critical capabilities will reduce operating expenses for their organizations, grow sustainable revenue from new prospects and customers, and delight those new customers along the way. This is a win-win for banks and consumers. Join me next week as we discuss best practices across the entire demand deposit account life cycle.

As millennials continue to experience challenges in obtaining credit, Experian’s latest research finds that this population is very receptive to nonbank lenders for the ease, speed and accessibility they provide.

The world of online marketplace lending has grown tremendously over the past several years. Still, for as much hype as it has received, it’s important to note the sector represents only 1.1 percent of unsecured loans and 2.5 percent of small business loans in the United States. While the industry is still in its infancy, it's expected to grow at an annual rate of 47 percent in the U.S by 2020, according to Morgan Stanley. And as it transitions from its “start-up” phase into “adolescence,” many expect it will become a high-growth, mature and stable market, bringing great benefit to consumers of financial services. So what does the future hold for online marketplace lenders? Who better to weigh in than those in the space, going through the evolution, seeing challenges first-hand and keeping a pulse on where they need to invest in order to survive. This video features a diverse group of leaders in the online marketplace lending industry. // Peter Renton, Founder, Lend Academy Scott Sanborn, COO, Lending Club Sam Hodges, Co-founder, Funding Circle USA Andrew Smith, Partner, Covington & Burling Joseph DePaulo, CEO, College Ave. Kathryn Ebner, VP, Credibly Without stealing all of their thunder, a few key themes emerged for 2016. Online marketplace lenders will look to expand their product offerings into all credit verticals – personal loans, auto, student, small business and beyond. Expect competition to continue to heat up. Large institutional investors will increasingly back and test the space. Some players will partner with large banks. Many will explore scoring with the use of alternative data. Innovations to come in customer service and product expansion. Bottom line, alternative finance doesn’t seem so “alternative” anymore. As such, competition will heat up, and regulators will continue to keep an eye on business practices, processes and what it all means for consumers. To learn more about online marketplace lending, visit https://www.experian.com/business-services/landing/marketplace-lending.html

It may seem like April is far away, but tax season in fact launches next Tuesday, January 19. And whether you’re a business or an individual, you’ll want to know if you’re eligible for any tax benefits. Thanks to a recent announcement from the Internal Revenue Service (IRS), identity theft protection will now be considered a non-taxable benefit – a nod to the rising importance of the service for all consumers in today’s security landscape. The IRS will treat identity theft protection as a non-taxable, non-reportable benefit—for any employee or company, regardless of whether they’ve experienced a data breach, or whether the identity theft protection is provided by an employer to employees or by a business to its customers. Previously, only employees or customers who were in the aftermath of a data breach could treat identity theft monitoring as a non-taxable event. But after that announcement just four months ago, several businesses suggested a data breach was not a remote risk, but rather, “inevitable.” What does this mean for companies? They can now deduct any cost of offering identity theft protection to their employees or customers. The IRS defines identity theft protection services as: Credit report and monitoring services Identity theft insurance policies Identity restoration services Other similar services It’s important to note that these don’t need to be reported on either W-2 or 1099-MISC forms. However, this new policy won’t apply to cash given to employees or customers in place of identity protection services. Perhaps the change in defining what qualifies was spurred by the IRS’s need to provide identity theft protection last summer, as its online database of past-filed returns and other documents was hacked. That breach affected over 300,000 individuals. Whatever the reason, the announcement means this is a perfect time to sign up for identity theft monitoring services. You can do so through an employer or directly with a retailer. Particularly for individuals, the ability to receive tax benefits while knowing your personally identifiable information is safe and secure is a great feeling. For existing subscribers, upgrading to premium services may now be a more viable option. Does your company offer identity theft protection and monitoring as an employee benefit? If not, would this announcement change their minds? Visit our website for more information on identity protection products you can offer your customers. Learn more

The new year has started, the champagne bottles recycled. Bye-bye holidays, hello tax season. In fact, many individuals who are expecting tax refunds are filing early to capture those refunds as soon as possible. After all, a refund equates to so many possibilities – paying down debt, starting a much-needed home improvement project or perhaps trading up for a new vehicle. So what does that mean for lenders?  As consumers pocket tax refunds, the likelihood of their ability to make payments increases. By the end of February 2014, more than 48 million tax refunds had been issued according to the IRS – an increase of 5.6 percent compared to the same time the previous year. As of Feb. 28, the average refund in 2014 was $3,034, up 3 percent compared to the average refund amount for the same time in 2013. To capitalize on this time period, introducing collection triggers can assist lenders with how to manage and collect within their portfolios. Aggressively paying down a bankcard, doubling down on a mortgage payment or wiping out a HELOC signal to the lender a change in positive behavior, but without a trigger attached, it can be hard to pinpoint which customers are shifting from their status quo payments. Experian actually offers around 100 collection triggers, but lenders do not need all to seek out the predictive insights they require. A “top 20” list has been created, featuring the highest percentages in lift rates, and population hit rates. Experian has done extensive analysis to determine the top-performing collection triggers. Among the top 15 to 20 triggers, the trigger hit rate ranged from 2 to 8 percent on an average client’s total portfolio, taking into consideration liquidation rates, average percent of payment lifts, lift in liquidation rates over the baseline liquidation, percent of overall portfolio that triggered, percent of overall portfolio that triggered only on the top-selected triggers, and percent of volume by trigger on the total customers that had a trigger hit. With that said, it is essential to implement the right strategy that includes a good mixture of the top-performing triggers. The key is diversifying and balancing trigger selection and setting triggers up during opportune times. Tax season is one of those times. Some of the top-ranked triggers include: Closed-Zero Balance Triggers: This is when a consumer’s account is reported as closed after being delinquent for a certain number of days. Specifically, the closed-zero balance trigger after being delinquent for 120 days has the highest percent of payment lift over an average payment that you would receive from a customer (at a 710 percent lift rate). These triggers are good indicators the consumer is showing positive improvement, thus having a higher likelihood for collections. Paid Triggers: This is when a consumer’s account is reported as paid after being delinquent, in collections, etc. Five of the top 20 triggers are paid triggers. These triggers have good coverage and a good balance between high lift rates (100 percent to 500 percent) and percent of the triggered population. These triggers are also good indicators the consumer is showing positive improvement, thus having a higher likelihood for collections. Inquiry Triggers: This is when a consumer is applying for an auto loan, mortgage loan, etc. The lift rates for these triggers are lowest within the Top 20, but on the other hand, these triggers have the highest hit rates (up to a 33 percent hit rate). These triggers are good indicators consumers are seeking to open additional lines of credit. Home Equity Loan Triggers: These triggers indicate the credit available on a consumer’s home equity loan. They are specifically enticing to collectors due to the fact that home equity lines of credit are usually larger than your average credit on your bank card. The larger the line of credit, the more you are able to potentially collect. To learn more about collection triggers, visit https://www.experian.com/consumer-information/debt-collection.html

Looking at true fraud rate I’ve talked with many companies over the years about their fraud problems. Most have a genuine desire to operate under the fraud prevention model and eliminate all possible fraud from their systems. The impact on profit is often the primary motivation for implementing solutions, but in reality most companies employ a fraud management schema, offsetting the cost of fraud with the cost of managing it. There are numerous write-ups and studies on the true cost of fraud. What most people don’t realize is that, for each item lost to fraud, a business operating on 10 percent net profit margins will need to sell 10 times the amount of product in order to recover the expense associated with the loss. These hard costs don’t include the soft dollar costs, such as increased call center expenses to handle customer calls. Recently, some organizations have started to add reputational risk into their cost-of-fraud equation. With the proliferation of social media, a few unhappy customers who have been victims of fraud easily can impact an organization’s reputation. This is an emerging fuzzy cost that eventually can be tied back to lost revenue or a drop in share price. Most companies say with pride that their acceptable fraud rate is zero. But when it comes time to choose a partner in fraud detection, it almost always comes down to return on investment. How much fraud can be stopped — and at what price? More informed organizations take all operational expenses and metrics into consideration, but many look at vendor price as the only cost. It’s at this point that they start to increase their acceptable fraud rate. In other words, if — hypothetically — Vendor A can stop only 80 percent of the fraud compared with Vendor B, but Vendor A costs less than 80 percent of what Vendor B costs, they’ll choose Vendor A. All of a sudden, their acceptable fraud rate is no longer zero. This method of decision making is like saying we’ll turn off the security cameras for 20 percent of the day because we can save money on electricity. On the surface, I understand. You have to be accountable to the shareholders. You have to spend and invest responsibly. Everyone is under pressure to perform financially. How many executives, however, take the time to see where those lost dollars end up? If they knew where the money went, would they change their view? We must be vigilant and keep our acceptable fraud rate at zero.