Whether you’re a seasoned professional or a freshly minted college graduate, you likely know about the importance of a good credit score. That score goes a long way toward determining whether you’ll be offered a loan to buy a house or car, and what kind of interest rate you’ll pay.
Knowledge about one’s credit score is critical for any American consumer, but it’s not the only score you need to be aware of today. In recent years, major retailers and other service providers have come to rely on so-called “secret” consumer scores (sometimes called “secret surveillance” scores) to guide their interactions with customers.
These scores—and how they’re tabulated—are relatively unknown. But they can determine everything from the price you pay for an item to how quickly a company’s customer service team will respond to your inquiry, and whether or not a retailer will accept a returned item.
Analyzing Your Digital Footprint
Enormous volumes of data about all of us is collected continually through our smartphones, social media, various connected devices and online impressions. That data, combined with extraordinarily powerful computers and sophisticated algorithms, have enabled new ways for companies to rate their customers.
The amount of information being crunched by the firms that calculate secret consumer scores is staggering. When one reporter requested her file from a customer-rating company named Sift, she received a 400-page report with the text of all the messages she had sent to Airbnb hosts, the orders she had placed on Yelp, and details about the device she had used for each transaction.
The Scorekeepers
One of the reasons credit scores are fairly straightforward is that they’re calculated by the three major credit bureaus—Experian, TransUnion and Equifax—and each uses similar metrics. By contrast, there are a number of companies calculating secret consumer scores, and each one uses its own criteria to rate customers.
In its recent letter about consumer rating agencies, the California-based nonprofit Consumer Education Foundation named 11 firms that provide ratings of shoppers, renters and potential employees to corporate clients.
Among the more prominent companies compiling the scores are:
● Sift has likely received the most media attention. Its primary focus is on helping companies protect themselves against fraud, which they do by analyzing more than 16,000 different data points. In a blog post about how it calculates scores, Sift emphasizes that its scores are primarily designed to rate the risk of specific transactions, not individual people.
● Zeta Global provides a rating of customer value, which helps companies decide what type of service to provide to customers—including how quickly to address requests and problems. It maintains a database of some 700 million people, with an average of more than 2,500 data points per person. The data includes things like how often someone calls a customer service line, and whether or not they have recently investigated a competitor’s website.
● Retail Equation crunches data to help big retailers decide whether or not they should allow you to return an item you purchased. As its website states, its equation is aimed at detecting the 1% of consumers “whose behaviors mimic return fraud or abuse, which is a $18 billion to $24 billion per year problem in the United States.”
Learning More About Your Consumer Score
A major difference between credit scores and consumer scores is that the three major credit bureaus are required to provide a free credit report each year to anybody who requests one.
The companies that tabulate consumer scores aren’t required to release them, but some do. Here’s how to get yours:
● Sift will provide consumers with data if you email privacy@sift.com.
● Zeta Global asks those interested in seeing their data to fill out this online form.
● Retail Equation says it will provide a report to those who email returnactivityreport@theretailequation.com.
Another important difference between credit scores and consumer scores is what steps you can take to improve or correct them. Disciplined, on-time repayments of loans will always improve a credit score, and persistence in correcting credit mistakes eventually pays off. But that formula is not as clear-cut with secret consumer scores. Nonetheless, knowledge about the data that companies are using to make decisions about how to treat you is a good start.
A former editor at Los Angeles magazine, Chris Warren’s writing has appeared in publications ranging from Institutional Investor and Forbes to National Geographic Traveler, Oxford American and Greentech Media.
Read this article next to learn more about how to improve your credit score!