Martin's measurements were so precise that he could tell you the "riskiest" drinking establishment in Canada - Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the "safest" products - premium birdseed and a device called a "snow roof rake" that homeowners use to remove high-up snowdrifts so they don't fall on pedestrians.
It's not just that what you buy reflects your socioeconomic level and current financial status, however; what Martin did was take the raw data and tease out personality traits that explained the the purchases while predicting future behavior.
Why did birdseed and snow-rake buyers pay off their debts? The answer, research indicated, was that those consumers felt a sense of responsibility toward the world, manifested in their spending on birds they didn't own and pedestrians they might not know. Why were felt-pad buyers so upstanding? Because they wanted to protect their belongings, be they hardwood floors or credit scores. Why did chrome-skull owners skip out on their debts? "The person who buys a skull for their car, they are like people who go to a bar named Sharx," Martin told me. "Would you give them a loan?"
Lenders have been using this sort of data mining ever since, but until recently they've kept it on the down-low to avoid triggering any privacy fears from customers. Now, with billions of dollars of losses from formerly profitable customers (i.e. the slightly risker ones) who suddenly can't pay, the lenders are using their psychological data not only to screen for the "right" sorts of customers but also to try to convince the bad ones to pay off their debts.
There's another reason for this, too: it helps build a stronger relationship with the customer.
If a credit-card company detects unsettling patterns, it might start cutting credit lines, raising interest rates or accelerating repayment schedules. (Companies are expected to withdraw $2.7 trillion of credit by the end of 2010, according to a March report from the Meredith Whitney Advisory Group, a banking-analyst firm.) But the most useful information the card companies are deriving from their data are the insights that help them deepen their relationships with customers, particularly when a cardholder is going through a rough time. One of the strongest conclusions of the psychological studies is that cardholders are most likely to pay the bills of those companies with which they have an emotional connection.
"What Does Your Credit-Card Company Know About You?" [New York Times Magazine]
(Photo: aturkus)
I'm gonna go buy cartoons and porn at the same time- see if they add me to some sort of list
]]>@Eyebrows McGee (popping ~May 29): Your doctor?
]]>@ds: Sorry but since some insurance companies already use credit reports to rate so this is not far off... roll it up with the gps that auto insurance companies want to use to track your actual driving
.
Congratulations, although I'm hoping for three more days so your kidlet can share my b-day. :P
]]>Thanks!
]]>I am "Robert A Dole"
]]>And I agree about the baby marketing, especially to people who are trying and having difficulty. It was even bad when we got some stuff in the mail for my cat ... who had died. I can't even IMAGINE if it was for a baby one was struggling to conceive or, God forbid, had lost.
]]>It's probably not your specific credit card issuer doing most of the profiling.. It's Trans Union, Experian, et al. doing most of the dirty work.
At best, the "good" purchases would cancel out the "bad" purchases, and neither cards' rate/limit would be affected. At worst, it might tip them off that you're gaming the system and raise red flags -- Or perhaps just seriously OCD in separating your transactions.
However, mess with them in other ways that are probably other psychographic factors. Always pay one card the very same day you receive the statement, the other always on the due date. (never past due though) Make minimum payments on one and $xx over minimum payment on another. Use one only between 5pm and 7pm on weekdays and 10am-4pm weekends, and use the other between 11pm and 11am any day of the week, etc.
Again this might all be moot as purchasing habits would most likely be collated amongst all your cards, but would otherwise be a fun project to work on en masse among Consumerists. Buy the responsible items at ungodly hours and max out your limit doing so. Pay well above minimum payment or the full balance when financing your tattoos and car tinting, etc..
]]>@hedonia: You described some of the main dangers of credit card profiling . I've heard stories of supermarkets selling information from the discount cards everyone thinks is oh so great . One of the big problems is that what if you are picking up items for someone else or just in case . They're trying to play Dick Tracy without all the facts .
If you buy tickets to wrestling does that mean you're violent , if you buy a radar detector does that mean you will actaully speed OR if you buy a membership to a gym or vitamins will you be AUTOMATICALLY considered a lower health risk to health insurers ? - it works both ways - right ? ...
Most credit companies and businesses have clauses that they more or less say they can do anything as long as it is business between you and them - related business . And probably the universal default clauses that allow them to raise rates are probably the same ones that can change other terms of the contract .
]]>However, I do have a theory. It would be easy enough for BabyCo to send a few dollars to an OB/GYN clinic in exchange for a list of say, patient addresses, without any specific information about their condition. Then you just blanket those addresses with baby related mail.
Legal or not, I can definitely see it happening.
]]>Perhaps it's some kind of intelligence test. :-)
]]>Clearly, the chair leg pad thingies are the key to win.
]]>Then when it wasn't working, getting those "congrats" mailings were deeply painful. I went ballistic eventually on Pampers because despite many requests to stop, they kept sending me diapers along with cards about how my baby was growing this month. I had to phone and cry about my infertility before they took pity and stopped sending me stuff.
Then when I finally did get pregnant a couple of years later, it all started up again. Some of it still comes, roughly matching our daughter's age. They are desperate to get her brand loyalties locked in as soon as they can.
But I often wonder if they care how much the persistent, tracking marketing exacerbates tragedy. I'm sure parents who lose babies are routinely crushed by constant, "Your baby is almost one year old, have you fed them new Grabby Snax by Babyco? Here's a coupon!"
The baby marketing just crosses the ick line too often.
Congrats on your forthcoming due date, btw. I like your posts here and if there was a friending feature i'd add you, but you're about to be too busy to read and post anyway. :D
]]>Next time I go shopping I'm wearing my tin foil hat.
]]>does anyone else find it ironic that credit card companies think you're risky if you patronize a place called Sharx?
]]>D'oh! I mean the bottom poster.
]]>I like this one the best.
]]>The first person who loses their credit line after paying for Zoloft on their VISA card is in for a rude shock. And a nice payday.
Can't wait to see that class-action suit. Release the bats!
]]>@friendlynerd:
Nothing wrong with being a crazy cat lady!
@Citizen Kang: Good point. I hope they don't send the info to my health insurer. ;)
]]>@ohiomensch: Questions like that are used to verify your ID . If you are giving an answer they know you are lying if you don't have a sister . Or they may use that a code or password in the future.
From a profiling standpoint they now know do you give out personal information and/or how easily you give up that information not that it necessarily means much .
Half the time they ask you these questions they are in effect trick questions with a different purpose in mind . Police and lawyers do it . Doctors & insurance companies do it . They get as much information as possible to derive new information or cover their butts if something goes wrong in the future .
And that's why daily life is becoming a job interview .
]]>Probably that you're going to die in an auto accident unless the clogged arteries get you first.
]]>In my defense, I don't think they'd know mine, either. We're just not big anniversary remembering people.
]]>Was gonna buy an iPod, decided on buying a cotton candy machine.
On second thought...
]]>And there's a LOT of it that's sent to my husband, too, who has a different last name than I do. So I have no idea where they got it.
]]>Nothing to do with your ability to pay the bill, all about proving you're actually you.
]]>@ds: If you use a store brand card in that store, they have the ability to link all of your individual purchase to you. This has been possible for a long time.
]]>@hedonia: For the most part they can't track individual items in a purchase. I worked for a top 5 US credit card issuer and all we saw from our Visa & Mastercard customers was the store name and total amount. No SKU level data. Even trying to figure out the store was a challenge since we had no relationship with the store(the merchant bank did) and the naming conventions were very inconstent. That being said, some stores were a single or limited line of prodcuts (e.g., bookstores, gas stations, bars, etc.) and would provide some indication of the purchase type. On the other hand, a purchase at Walmart would not be able to provide any level of detail of what kind of purchase was made.
I don't know how Canadian Tire would get access to SKU level information, unless the purchase was made in Canadian Tire store. Since Canadian Tire sells much more than tires, I would guess that all SKU level data comes from CT stores, and purchases at place like Sharx Pool Bar would only show the total purchase (not what drinks you bought ;^).
]]>I already refuse to give out my phone number at retail stores no matter what I pay with. I am there to buy something, that should be good enough. Gathering data on me it just not needed and I feel no obligation to further their marketing efforts.
]]>Years ago, we all imagined the CIA would have this info (which is bad enough). Handing it over to CC companies (historically, not the most trustworthy or honest folks) is worse than we thought.
Or, maybe it's because I don't buy birdseed.
]]>Do they really need to know how often/how many condoms someone buys from CVS? Will they cut my limit if they see I'm buying a lot of pregnancy tests? What if I'm buying lots of books about how to start a business, and they see that as a high risk activity (but in reality I'm just reading about it for recreation).
There's a lot of what-ifs that really bother me about this, but the biggest concern is really that I don't feel like I was ever informed that they would have line-item information about my purchases.
Can anyone dig up any language in an agreement that says that they do/can, and if so, what privacy options there are, if any?
]]>@full.tang.halo: +1
This doesn't surprise me at all. Just a couple of weeks ago I applied for a store credit card (to get the discount) They called to verify my identity by asking questions like, could I verify my sisters birth date? Like what does that have to do with my ability to pay my bill I would like to know.
]]>@u1itn0w2day: Ugh the overuse of spaces after punctuation is all kinds of wrong.
]]>i've never had a credit card....i want to perform an experiment.
1. get two different credit cards.
2. use one to buy chrome skulls, beer, guns and ammo
3. use the other to buy birdseed, little felt pads, snow shovel thingies
4. see how the interest rates compare on the two cards after a year or two
that would be quite interesting, i think.
]]>+1
]]>Big Brother , 1984 , air travel - take your choice. Everything you do in life will become the equivilent of a job interview .
Well , job security for these computer programs who make these profile programs and for those account managers who use them . At least somebody gets a job out of this .
A cash/underground economy is coming quicker than you think . The credit card companies are going to whine ok you want to regulate us try getting credit now mother frackers . People won't be willing to go through this crap for every financial transaction in life . A truely novice idea would be to simplify the credit process wether if be just charging another month's interest for being late and just relying on a customer's record with you .
And would profiling be legal ?
]]>/or maybe stalker-killers are GREAT credit customers
//"she was always so quiet... and she paid her bills on time"
Interestingly enough, about 15% of my income in the past 10 months has gone towards gun and ammunition purchases. I know my cc company is just praying they don't have to come to try and collect from me...
]]>I shudder to think what my profile indicates, While I bought some of those felt pads I also frequent divey bars
]]>@katieoh: If it wouldn't probably kill whatever profile I already have, I'd go out and buy "intimacy aids", birdfeed, twine, a cardboard box, and a CornBaller. Just to see what would happen.
]]>Now I can't decide if I'm glad or pissed I put both those things on my card. In the last year. Like on the one hand, yay! The think I'm responsible! On the other hand, DAMMIT, my CC issuer is psychologically stalking me.
]]>@Chris Walters: Clearly, buy a snow rake, rake the snow off of Sharky's, and then buy yourself a celebratory beer. And then feed some birds from your newly be-skulled (?!?) car.
]]>It only occurred to me because EVERY COMPANY ON THE FREAKING PLANET has been sending us baby-related special offers and rates and deals and coupons. If our insurer knows enough to know to drop my husband's rates now that he'll be a dad when we haven't seen our agent since before I got knocked up, I'm betting the credit card company knows it too.
]]>Hooray for data mining.
Someone should reverse engineer the system and publish a guide of what to buy when you want to make the card company think better of you.
]]>Oh, but maybe I shouldn't tell my CC company that ...
]]>I would like to see my profile. All I buy is gas and fast food so I wonder what they would say about me.
]]>also, i find this fascinating. v v big brother, but also fascinating. patterns!
]]>![[i18.photobucket.com]](http://i18.photobucket.com/albums/b120/liferbabe/atfstore-1.jpg){kind=link}