Television had its Twilight Zone, the Emmy-winning anthology series featuring tales rich in fantasy, morality and irony. Today's economy has its own Twilight Zone. It lies between the legitimate economy with its weekly paychecks, W2 forms and 401(K) plans, and the underground economy with its unreported, all-cash transactions. Call them "The Unbanked." Call them "The Credit Invisibles." Whatever label you choose, these men and women -- who number in the millions - want access to credit, but can’t be easily accessed with traditional credit models, and they lack a smooth on-ramp to grow in the credit universe. How a Worker Becomes "Credit Invisible" America's "credit invisibles" tend to be minimum- or low-wage workers. They exist in virtually every industry, although they tend to be concentrated in agriculture, food service, construction and manufacturing. Some work full-time for a single employer, while others work part-time or on a gig-by-gig basis. The FDIC estimates some 10 million Americans currently fit the definition of unbanked, while an additional 28.4 million are underbanked. Instead of traditional banks, this population tends to use the services of private check-cashing services and payday lenders for their financial services, which is not always advantageous for the consumer with these services’ sizeable expenses and transaction fees. The Payroll Card Alternative Recognizing the perils inherent in the current system, a number of companies have developed solutions to help those individuals who cannot and will not establish traditional checking and savings accounts. SOLE® Financial, a financial services company headquartered in Portland, Ore, offers the SOLE Visa® Payroll Card, allowing employees to enjoy the benefits associated with direct deposit checking accounts without the costs and restrictions traditional banks often impose. "From a payroll standpoint, paycards function just like bank accounts,” explained Taylor Ellsworth, content marketing manager for SOLE Financial. “The transfer happens on the exact same timeline as the paychecks that employers deposit to traditional bank accounts.” Additionally, any bill from a vendor that accepts electronic payments - either online or with a card number over the phone - can accept payments from the SOLE paycard. "For bills like rent, which sometimes can only be paid with a check or money order, cardholders can log in and use the bill pay option for $1 per bill to have a check issued to their landlord -- or any other recipient -- from their account,” said Ellsworth. Helping Credit Invisibles Build Personal Credit Files Another way companies are helping credit invisibles become visible is by considering non-retail payments, such as payments to utility companies, as part of a personal payment history. Traditionally payments to gas, electric, telephone, cable and other household service providers are generally not being reported unless the consumer is severely delinquent and thus on-time payment history is not included in credit scores. Experian recently investigated how including payments to energy utilities could affect men and women with "thin-file" credit portfolios. The subprime and nonprime consumers in the study received the greatest positive score impact, with 95 percent of subprime consumers and 75 percent of nonprime consumers experiencing a positive score change. A resounding 82 percent of subprime consumers in the study received a positive score impact of 11 points or more. The average VantageScore® credit score change for all participants was an increase of 28 points. Experian concluded, "positive energy-utility reporting presents an opportunity for energy companies to play a key role in helping their consumers build credit history. The ability for many of these consumers to become credit-scoreable, build a more robust credit file and potentially migrate to a better risk segment simply by paying their energy bills on time each month is powerful and represents an opportunity for positive change that should be not overlooked." Conclusion With income inequality growing, there is an increasing pressure to find ways to improve the prospects of the tens of millions of Americans who live on the farthest edges of the American economy. New technologies and ways of looking at credit can offer the unbanked and the under-banked ways to improve their economic situation and move closer to the mainstream. By bringing these millions into the light, those who issue and evaluate credit will create millions of new customers who can, in turn, add new energy to the American economy.

This article first appeared in Baseline Magazine Since it is possible for cyber-criminals to create a synthetic person, businesses must be able to differentiate between synthetic and true-party identities. Children often make up imaginary friends and have a way of making them come to life. They may come over to play, go on vacation with you and have sleepover parties. As a parent, you know they don’t really exist, but you play along anyway. Think of synthetic identities like imaginary friends. Unfortunately, some criminals create imaginary identities for nefarious reasons, so the innocence associated with imaginary friends is quickly lost. Fraudsters combine and manipulate real consumer data with fictitious demographic information to create a “new” or “synthetic” individual. Once the synthetic person is “born,” fraudsters create a financial life and social history that mirrors true-party behaviors. The similarities in financial activities make it difficult to detect good from bad and real from synthetic. There really is no difference in the world of automated transaction processing between you and a synthetic identity. Often the synthetic “person” is viewed as a thin or shallow file consumer— perhaps a millennial. I have a hard time remembering all of my own passwords, so how do organized “synthetic schemes” keep all the information usable and together across hundreds of accounts? Our data scientists have found that information is often shared from identity to identity and account to account. For instance, perhaps synthetic criminals are using the same or similar passwords or email addresses across products and accounts in your portfolio. Or, perhaps physical address and phone records have cross-functional similarities. The algorithms and sciences are much more complex, but this simplifies how we are able to link data, analytics, strategies and scores. Identifying the Business Impact of Synthetic-Identity Fraud Most industry professionals look at synthetic-identity fraud as a relatively new fraud threat. The real risk runs much deeper in an organization than just operational expense and fraud loss dollars. Does your fraud strategy include looking at all types of risk, compliance reporting, and how processes affect the customer experience? To identify the overall impact synthetic identities can have on your institution, you should start asking: Are you truly complying with "Know Your Customer" (KYC) regulations when a synthetic account exists in your active portfolio? Does your written "Customer Identification Program" (CIP) include or exclude synthetic identities? Should you be reporting this suspicious activity to the compliance officer (or department) and submitting a suspicious activity report (SAR)? Should you charge off synthetic accounts as credit or fraud losses? Which department should be the owner of suspected synthetic accounts: Credit Risk, Collections or Fraud? Do you have run any anti-money laundering (AML) risk when participating in money movements and transfers? Depending on your answers to the above questions, you may be incurring potential risks in the policies and procedures of synthetic identity treatment, operational readiness and training practices. Since it is possible to create a synthetic person, businesses must be able to differentiate between synthetic and true-party identities, just as parents need to differentiate between their child's real and imaginary friends.

Businesses are looking to international markets to fuel growth, but meeting regulatory requirements across the globe poses significant challenges. Changes in Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements are evolving at break-neck speed. In the past few years, financial institutions and corporations have incurred billions of dollars in fines, reputation damage, and even the possibility of criminal prosecution for not enforcing adequate regulatory controls. KPMG found that 70 percent of its respondents had received a regulatory visit within the past year focused on KYC and total investment in AML had increased by an average rate of 53 percent. As large as this additional investment may seem, there may be an even bigger cost to doing regulatory compliance the right way. For many businesses the customer experience is the biggest casualty of implementing a robust KYC program. In their Vision 2016 breakout session “Know your customer, meeting commercial requirements in a global marketplace,” Greg Carmean, Experian senior product manager, will be joined by Adel Shrufi, software development manager at Amazon Transaction Risk Management Systems. They will discuss: • How to streamline compliance to optimize the client experience • How to evaluate and select the best vendors to reduce compliance costs and operational vulnerabilities • What businesses need to consider to ensure successful launches in new international markets Watch our session preview video below: We’ll look forward to seeing you as we provide a road map for growth at this year’s Vision conference.

Experian’s 2016 Digital Marketer Report reveals the key issues impacting marketers today. 38% of marketers rank knowing customer needs, wants and attitudes as their top challenge. Other key challenges include: Increasing visibility over competitors (35%) Staying ahead of new marketing trends (33%) Integrating multiple marketing technologies and platforms (32%) Making messages relevant/contextual (27%) Companies can increase engagement by leveraging data and technology to understand customers and provide exceptional experiences through every channel, every time. >> Download The 2016 Digital Marketer Report

The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, and an average balance of $29,000. In fact, a recent Experian study revealed consumer debt is decreasing in every major consumer lending category with the exception of student loans. Student loans have increased by 84 percent since the recession (from 2008 to 2014) and surpassed home equity loans, home-equity lines of credit (HELOC), credit card debt and automotive debt. While the student loan issue has been looming for years, the magnitude is now taking center stage with each 2016 presidential candidate weighing in on solutions. In an effort to provide deeper insights into the student debt universe, Experian’s Kelley Motley and Holly Deason will share a new analysis at Vision 2016 in a session titled, Get educated – a study in the student lending marketplace. They will be joined by Gordon Cameron, executive vice president of PNC. Among the findings they will share include a snapshot of consumers with student loans from three time periods – Pre-recession (December 2007), Recession (December 2009) and Post-Recession/Current (December 2015). At each of these time periods, they will reveal trends around outstanding debt, delinquencies, originations, and also a compare how consumers with student loans rank when it comes to Vantage Score distribution. Finally, their data will explore opportunities for consolidation, showing segments that might be best suited for  receiving offers from financial institutions based on Vantage Score, debt and total number of trades. Click here to learn more about Vision 2016 and the session on student loans.

As new vehicle prices continue to rise, more consumers are turning to leasing as a cost-effective auto financing option. Findings from the most recent State of the Automotive Finance Market report show that the average lease payment for Q4 2015 was $412 (versus the average loan payment of $493). Not surprisingly, due to the fact that most consumers tend to finance vehicles based on monthly prices, leasing reached a record high, accounting for 33.6% of all new financing during the quarter. Lenders can design more effective strategies by using analytics to gain insight into the latest trends and to target the right customers for automotive leases and loans. >> Video: Auto Acquisition Strategies

What difference does $4.40 make? It can’t buy you much on its own, but it can make a world of difference when you’re handling the aftermath of a data breach or other cyberattack. That’s how much cyber insurance protection reduces the per-record cost of a data breach, according to the Ponemon Institute’s 2015 Cost of a Data Breach report. Whether you’re a small business owner with just a few hundred customers or a global corporation with records in the millions, the cost of being without cyber insurance in the wake of an incident can be extreme. When you consider the sheer number of records involved in recent mega-breaches — more than 78 million in the Anthem breach alone — the cost reduction can easily soar into hundreds of million dollars saved. And while smaller businesses may have fewer records to be breached, the impact of an attack can be even more devastating to them than to global entities when they experience a mega-breach. Yet less than one-third (32 percent) of businesses surveyed for Ponemon’s study reported having cyber insurance. The percentage was a bit better when the Risk Management Society (RIMS) asked 284 of its members about cyber insurance; 51 percent reported having stand-alone cyber insurance policies. Even fewer small businesses report having cyber insurance. Just 5 percent of small business owners surveyed by Endurance International Group said they carried cyber insurance, despite 81 percent believing cybersecurity is a concern for small business. Those who have cyber insurance clearly understand its value. RIMS members said they bought policies to: Reduce the risk of an incident damaging their company’s reputation (79 percent). Minimize the potential impact of business interruption (78 percent). Aid in data breach response and notification (73 percent). What’s more, of the RIMS members who didn’t have cyber insurance, 74 percent said they were considering buying it within the next 12–24 months. While small business owners also appear aware of the risk, they seem less cognizant of the benefits of cyber insurance and other cybersecurity measures. Endurance found that although 94 percent of small business owners said they do think about cybersecurity issues, and nearly a third have experienced an attack or an attempt, just 42 percent have invested in cybersecurity in the past year. A widely reported study by the National Cyber Security Alliance asserts that 60 percent of small businesses that experience a data breach go out of business within six months. Cyber insurance premiums vary widely and are largely tied to a company’s revenues and exposure. Policies typically aim to address risks commonly associated with a cyberattack, including: Liability for loss of confidential information that occurs through unauthorized access to a company’s computer systems. Data breach costs including notification of affected consumers, customer support and providing credit monitoring to affected customers. The costs of restoring, improving or replacing compromised technologies. Regulatory compliance costs. Business interruption expenses. Of course, like virtually any other type of insurance, cyber insurance policies can be customized to address the risks facing the individual policy holder. Many in the insurance industry feel that cyber insurance products have matured, evolving into a type of protection that businesses both large and small simply can’t afford to do without. When you consider the devastating risk of facing a cyberattack without insurance, that simple per-record cost savings of just $4.40 takes on a much deeper meaning. While more large companies are seeing the value of cyber insurance, small business owners need to begin incorporating this valuable type of protection into their overall cyber security plans. Learn more about our Data Breach solutions

Whether its new regulations and enforcement actions from the Consumer Financial Protection Bureau or emerging legislation in Congress, the public policy environment for consumer and commercial credit is dynamic and increasingly complex. If you are interested to learn more about how to navigate an increasingly choppy regulatory environment, consider joining a breakout session at Experian’s Vision 2016 Conference that I will be moderating. I’ll be joined by several experts and practitioners, including: John Bottega, Enterprise Data Management Conor French, Funding Circle Troy Dennis, TD Bank Don Taylor, President, Automated Collection Services During our session, you’ll learn about some of the most trying regulatory issues confronting the consumer and commercial credit ecosystem. Most importantly, the session will look at how to turn potential challenges into opportunities. This includes learning how to incorporate new alternative data sets into credit scoring models while still ensuring compliance with existing fair lending laws. We’ll also take a deep dive into some of the coming changes to debt collection practices as a result of the CFPB’s highly anticipated rulemaking. Finally, the panel will take a close look at the challenges of online marketplace lenders and some of the mounting regulations facing small business lenders. Learn more about Vision 2016 and how to register for the May conference.

A recent Experian study reveals that tax filing, document collection and refund processing are done online more often, yet only 6% of consumers file taxes on a computer with up-to-date antivirus software. 79% filed their most recent tax return online, up from 73% in 2011 18% scan and save their tax documents electronically, up from 6% in 2011 More than 75% of respondents have used EFT for tax refunds As electronic filing continues to grow, identity theft is likely to increase. While consumers should take steps to protect themselves, businesses also need to employ identity theft protection solutions to safeguard consumer information. >> Identify and prevent fraud

Ensuring the quality of reported consumer credit data is a top priority for regulators, credit bureaus and consumers, and has increasingly become a frequent headline in press outlets when consumers find their data is not accurate. Think of any big financial milestone moment – securing a mortgage loan, auto loan, student loan, obtaining low-interest rate interest credit cards or even getting a job. These important transactions can all be derailed with an unfavorable and inaccurate credit report, causing consumers to hit social media, the press and regulatory entities to vent it out. Add in the laws and increased scrutiny from the Consumer Financial Protection Bureau (CFPB), and Federal Trade Commission (FTC) and it is clear data furnishers are seeking ways to manage their data in more effective ways. At Vision 2016, I am hosting a session, Achievements in data reporting accuracy – maximizing data quality across your organization, with several panel guests willing to share their journeys and learnings attached to the topic of data accuracy. Our diverse panel features leaders from varying industries: Jodi Cook, DriveTime Alissa Hess, USAA Bank Tom Danchik, Citi Julie Moroschan, Experian Each will speak to how they’ve overcome challenges to introduce a data quality program into their respective organizations, as well as best practices around assessing, monitoring and correcting credit reporting issues. One speaker will even touch on the challenging topic of securing funding for a data quality program, considering budgets are most often allocated to strategies, products and marketing directly tied to driving revenue. 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, and an overarching data integrity program, can deliver  a comprehensive view that satisfies regulators, improves the customer experience and provides better insight for internal decision making. To learn more about implementing a data quality plan for your organization, check out Vision 2016.

Device emulators — wolves in sheep’s clothing Despite all the fraud prevention systems and resources in the public and private sectors, online fraud continues to grow at an alarming rate, offering a low-risk, high-reward proposition for fraudsters. Unfortunately, the Web houses a number of easily accessible tools that criminals can use to perpetrate fraud and avoid detection. The device emulator is one of these tools. Simply put, a device emulator is one device that pretends to be another. What began as innovative technology to enable easy site testing for Web developers quickly evolved into a universally available tool that attackers can exploit to wreak havoc across all industry verticals. While it’s not new technology, there has been a significant increase in its use by criminals to deceive simple device identification and automated risk-management solutions to carry out fraudulent activities. Suspected device emulation (or spoofing) traffic historically has been difficult to identify because fraud solutions rely heavily on reputation databases or negative lists. Detecting and defeating these criminals in sheep’s clothing is possible, however. Leveraging Experian’s collective fraud intelligence and data modeling expertise, our fraud research team has isolated several device attributes that can identify the presence of an emulator being used to submit multiple transactions. Thanks to these latest FraudNet rule sets, financial institutions, ecommerce merchants, airlines, insurers and government entities alike now can uncloak and protect against many of these cybercriminals. Unfortunately, device emulators are just one of many tools available to criminals on the Dark Web. Join me at Vision 2016, where U.S. Secret Service and I will share more tales from the Dark Web. We will explore the scale of the global cybercrime problem, walk through the anatomy of a typical hack, explain how hackers exploit browser plug-ins, and describe how enhanced device intelligence and visibility across all channels can stop fraudsters in their tracks. Listen to Mike Gross as he shares a short overview of his Vision 2016 breakout session in this short video. Don’t miss this innovative Vision 2016 session! See you there.

Best practices and innovative strategies for banking to millennials Before we begin, a disclaimer: Banking to millennials is a long-term strategy. Many marketing campaigns will not drive immediate returns on investment, but they lay the groundwork for a lifelong, mutually beneficial relationship. Now, some good news. Millennials are just beginning their financial journey — getting ready to embark on a life that includes homes, cars, families and small businesses. Connecting with this generation today can bode well for a financial institution’s success tomorrow. With a strong relationship in place, millennials will turn to that organization when they are ready to fund their life events. Below are some key strategies that will help financial institutions build and continue banking to millennials. Keeping up with technological expectations Millennials were raised in the digital age, and therefore mobile devices are the hubs of their digital lives. They expect real-time access to their accounts for peer-to-peer payments, deposits, paying bills and customer service. Not meeting their digital expectations could drive them to seek another — more technology-oriented — financial institution that embraces CNP, mobile apps and social media. Authentic and targeted marketing messaging Millennials expect targeted messaging. Generic, catchall offers of the past fall flat for them. They want banks to figure out who they are, what they need and how they can access it with the tap of a finger. Additionally, messages to millennials should have a genuine voice that advises and supports them in achieving their goals. Many millennials are interested in taking control of their financial lives but are not prepared to do so. This is a great opportunity for financial institutions to introduce themselves. Connect millennials to something bigger Earning a millennial’s trust is one of the greatest challenges for financial institutions. While money is important, millennials are motivated by becoming a part of something bigger than themselves. Institutions can connect with millennials by creating opportunities to give back or pay-it-forward. Examples include encouraging growth in underbanked markets, such as lending circles, peer-to-peer lending and small-business lending, or partnering with local universities and nonprofits. Strategic segmentation Millennials are the most diverse population group — yet strategic segmentation is still possible. One ideal segment is recent college graduates. As a group, they yield a much different profile than their counterparts without degrees. These ambitious millennials are more likely to focus on life choices that require major financial considerations, such as getting married, having children, buying their first home and earning higher salaries. These life events will require a diverse set of financial services products, and millennials will turn to the institution that has gained their trust first. Millennials are one of the most important markets as financial institutions look to invest in future, long-term growth. Financial institutions need to show millennials that they’re committed to listening and to laying the groundwork for relationships that will help them achieve their dreams. Remember, though, reaching this audience is not about an immediate return on investment but rather a long-term strategy to develop trust and brand preference. Begin the relationship now to reap the rewards later. For more insights and innovative strategies on how to best market and develop a strong relationship with millennials, download our recent white paper, Building lasting relationships with millennials.

As automotive leasing trends to new heights, a rapid influx of off-lease vehicles are returning to market. Experian Automotive’s latest infographic explores the surge in off-lease vehicles, including which models and vehicle segments are most popular. Click here to download this infographic.  

In today’s interconnected world, reaching consumers should be as simple as sending a text or calling their cell phone. However, complying with the Telephone Consumer Protection Act (TCPA) can create an almost insurmountable mountain. While the law has been in place since 1991, TCPA litigation continues to be a considerable source of potential legal and compliance risk for companies communicating with consumers.  There were 1,908 TCPA lawsuits in 2014, an increase of 30 percent over the previous year, and a 231 percent increase in the last four years. Is your business facing challenges in complying with TCPA? Do you want to learn more about the changing and challenging TCPA legal and regulatory framework? Are you looking for best practices on how to win the battle of right party contact? Then you should join us for a breakout session solely focused on TCPA at Experian’s Vision 2016 Conference. The panel features a number of subject matter experts who will be able to provide attendees with a look at this law and some of the best practices to manage risk and ensure compliance. Panelists include: Mary Anne Gorman, Experian Tony Hadley, Experian Tom Gilbertson, Venable LLC   To learn more more about TCPA best practices, check out Experian’s annual Vision Conference in May.

April is Financial Literacy Month, a special window of time dedicated to educating Americans about money management. But as stats and studies reveal, it might be wise to spend every month shining some attention on financial education, an area so many struggle to understand. Obviously no one wants to talk money day in and day out. It can be complicated, make us feel bad and serve as a source of stress. But as the saying goes, information is power. Over the years, Experian has worked to understand the country’s state of credit. Which states sport higher scores? Which states struggle? How do people pay down their debts? And what are the triggers for when accounts trail into collections? In the consumer space especially, we’ve surveyed individuals about how they feel about their own credit as it pertains to a number of different variables and life stages. Home Buying: 34% of future home buyers say their credit might hurt their ability to purchase a home 45% of future home buyers delayed a purchase to improve their credit to get better interest rates Holiday Shopping: 10% of consumers and 18% of millennials say holiday shopping has negatively affected their credit score Newlywed Life: 60% believe it is important for their future spouse to have a good credit score 39% say their spouse’s credit score or their credit score has been a source of stress in their marriage 35% of newlyweds believe they are “very knowledgeable” regarding credit scores and reports And let’s not forget Millennials: 71% of millennials believe they are knowledgeable when it comes to credit, yet: millennials overestimate their credit score by 29 points 32% do not know their credit score 61% check their credit report less than every 3 months 57% feel like the odds are stacked against them when it comes to finances and 59% feel like they are “going it alone” when it comes to finances The message is clear. Finances are simply a part of life, but can obviously serve as a source of stress. Establishing and growing credit often starts at a young age, and runs through every major life event. Historically, high school is where the bulk of financial literacy programs have targeted their efforts. But even older adults, who have arguably learned something about personal finances by managing their own, could stand a refresher on topics ranging from refinancing to retirement to reverse mortgages. Over the next month, Experian will touch on several timely financial education topics, including highlighting the top credit questions asked, the future of financial education in the social media space, investing in retirement, ways to teach your kids about money, and how to find a legit credit counselor. But Experian explores financial education topics weekly too, committed to providing consistent resources to both businesses and consumers via weekly tweet chats, blog posts and live discussions on periscope. There is always an opportunity to learn more about finances. Throughout the year, different issues pop up, and milestone moments mean we need to brush up on the latest ways to spend and save. It’s nice so many financial institutions make a special point to highlight financial education in April, but hopefully consumers and lenders alike continue to dedicate time to this important topic every month. Managing money is a lifelong task, so tips and insights are always welcome. Right? Check out the wealth of resources and pass it on. For a complete picture of consumer credit trends from Experian's database of over 230 million consumers, purchase the Experian Market Intelligence Brief.