Welcome!

News Feed Item

SubscriberWise Issues Strong Warning with Proposed Legislation

SubscriberWise, the nation’s largest issuing consumer reporting agency for the communications industry, announced today that the proposed “Credit Access and Inclusion Act” currently assigned to Congress is a risky proposition. The legislation will result in worse outcomes for the overwhelming majority of the population it intends to help.

The analysis of SubscriberWise segmentation technology examined proprietary decision levels created by the issuing CRA to manage the significant population of underbanked prospects who apply for service with its member operators around the country. The analysis contains exclusively SubscriberWise® segmentation data from individuals who applied with member operators from 2006 through 2013.

“Approximately eighteen percent of the adult credit consuming population who apply for telecommunications services is non-scorable,” said David Howe, president of SubscriberWise. “And that percentage has remained constant for an entire decade. By non-scorable, we’re defining consumers who have a file at a national repository (i.e. Equifax, Experian, and TransUnion) but whose credit file fails to generate a credit score. The scoring logic leveraged by SubscriberWise (FICO 8) requires at least one open account that’s at least six months old or older and that’s been updated by a creditor at least one time during the previous six months1. For the vast majority of consumers, these rule thresholds are met with ease.

“So what’s the problem with the proposed legislation?” Howe asked rhetorically. “It assumes that the rent and cable payments from underbanked consumers are paid timely. It assumes that landlords and cable operators will overwhelmingly report positive payment behavior to boost otherwise marginal and poor credit records for the majority of this population. Moreover, the legislation infers that a positive tradeline from a rental agency or cable company will generate a favorable credit score for otherwise non-scorable consumers.”

The empirical evidence does not support this conclusion.

“The fact is that non-scorable consumers are riskier compared to credit-active consumers. Non-scorable consumers pay late and are disconnected often. It’s a fact that non-scorable consumers have an average 50 percent more collections compared to scorable consumers2. Among applicants to SubscriberWise member operators, it’s also known that underbanked consumers have fewer years of credit experience as reflected by the average age of an underbanked consumer vs. an credit-active consumer file2.

“And there’s another angle Congress has failed to consider: Reporting payment behavior – which would undoubtedly become an added and costly burden on the call center and staff – has the very likely possibility of adversely impacting consumer credit reports and scores among credit-active individuals. This is especially a concern among an operator’s otherwise slow-paying but highly reliable (profitable) customers – many of whom have good credit scores that could be seriously impacted by a single negative entry on their credit report.

“The protocol that operators employ today works incredibly well. It benefits both slow and non-payers equitably,” Howe continued. “Operators don’t report delinquency on a month-to-month basis. Instead, only after an account reaches several months of non-payment and ultimately becomes a write off, do most operators then send the obligation to a third-party collection agency. It’s then that the obligation – if continued to remain unpaid – may become a reported collection on the consumer’s credit file.

“In a query of one Midwest operator’s subscriber billing and management system, SubscriberWise quantified duplicate applications from every individual who had two or more SubscriberWise inquiries during a 7-year period. The query identified only those consumers who failed to generate a credit score on one application but later generated a FICO score during a subsequent service request (or during an account review inquiry following the initial application). The results were remarkable and revealed that only 4 percent of the underbanked population would move from a high risk decision segment into a low risk – or favorable – SubscriberWise segment. Another compelling fact: the average SubscriberWise decision level was a ‘Level 7.’ Level 7 subscribers are segmented based on FICO scores in the bottom 6 to bottom 15 percent of the adult credit consuming population,” explained Howe.

“The conclusions are unambiguous. When data is sufficient to calculate a FICO score among a previously unscorable consumer, one can anticipate a very low FICO score. And no matter the comparison timeline, the long-term data demonstrates this conclusion. Underbanked consumers remain high risk as evidenced by past due accounts and collection activity reported on credit reports, as well as very low FICO scores generated when data is sufficient. In my experience3 having evaluated more than 50,000 credit reports, there’s simply not sufficient evidence that a potentially positive tradeline – among the typically adverse underbanked credit report – would deliver its intended outcome of an improved credit score.

“It’s critically important for Congress to avoid making assumptions as it relates to the predictive ability of credit scoring that’s long proven highly accurate and reliable,” Howe concluded. “Congress must carefully evaluate the impact of this proposed additional reporting. Educating consumers about the benefits of responsible use of credit should be its zeal and pursuit.”

About SubscriberWise
SubscriberWise® launched as the first issuing consumer reporting agency exclusively for the cable industry in 2006. In 2009, SubscriberWise and TransUnion announced a joint marketing agreement for the benefit of America’s independent cable operators (http://www.subscriberwise.com/TransUnionJointMarketing.pdf). Today SubscriberWise is a risk management preferred-solutions provider for the National Cable Television Cooperative. SubscriberWise technology has prevented thousands of child identity thefts and uncovered the misuse of personally identifiable information for operators everywhere. SubscriberWise contributions to the telecom industry are in excess of twenty-five million dollars annually.

SubscriberWise is a U.S.A. federally registered trademark.

_______________________________________
1 http://www.subscriberwise.com/Fico850.pdf
2 http://www.subscriberwise.com/SubscriberWise_Quantifies.pdf
3 http://www.subscriberwise.com/fico_pro_certification.pdf

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Evatronix will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Evatronix SA offers comprehensive solutions in the design and implementation of electronic systems, in CAD / CAM deployment, and also is a designer and manufacturer of advanced 3D scanners for professional applications.
"I focus on what we are calling CAST Highlight, which is our SaaS application portfolio analysis tool. It is an extremely lightweight tool that can integrate with pretty much any build process right now," explained Andrew Siegmund, Application Migration Specialist for CAST, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that's no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, explored how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He expla...
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
DevOps promotes continuous improvement through a culture of collaboration. But in real terms, how do you: Integrate activities across diverse teams and services? Make objective decisions with system-wide visibility? Use feedback loops to enable learning and improvement? With technology insights and real-world examples, in his general session at @DevOpsSummit, at 21st Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, explored how leading organizations use data-driven DevOps to clos...
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, discussed how they built...
The dynamic nature of the cloud means that change is a constant when it comes to modern cloud-based infrastructure. Delivering modern applications to end users, therefore, is a constantly shifting challenge. Delivery automation helps IT Ops teams ensure that apps are providing an optimal end user experience over hybrid-cloud and multi-cloud environments, no matter what the current state of the infrastructure is. To employ a delivery automation strategy that reflects your business rules, making r...
The past few years have brought a sea change in the way applications are architected, developed, and consumed—increasing both the complexity of testing and the business impact of software failures. How can software testing professionals keep pace with modern application delivery, given the trends that impact both architectures (cloud, microservices, and APIs) and processes (DevOps, agile, and continuous delivery)? This is where continuous testing comes in. D
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...