Tag: regulatory compliance

Market volatility, evolving regulations, and shifting consumer expectations are a catalyst to make energy providers to rethink how they operate. Rising energy costs, grid reliability concerns, and the push for sustainable energy sources add layers of complexity to an already challenging landscape. In this environment, data analytics in utilities has become a strategic imperative, enabling companies to optimize operations, mitigate risks, and enhance customer experiences. With a wealth of data at their disposal, utilities must harness the power of utility analytics to transform raw information into actionable intelligence. This is where Experian’s energy and utilities solutions come into play. With an unmatched data reach of more than 1.5 billion consumers and 201 million businesses, we are uniquely positioned to help energy and utility providers unlock greater potential within their organizations, whether that’s by boosting customer engagement, preventing fraud and verifying identities, or optimizing collections. Market Challenges Facing the Utilities Sector Utilities today face a series of economic, regulatory, and operational hurdles that demand innovative solutions. Regulatory and Compliance Pressures: Governments and regulatory bodies are tightening rules around emissions, sustainability, and grid reliability. Utilities must balance compliance with the need for cost efficiency. New carbon reduction mandates and reporting requirements force energy providers to adopt predictive modeling solutions that assess future demand and optimize energy distribution. Economic Uncertainty and Rising Costs: Inflation, fuel price fluctuations, and supply chain disruptions are impacting the cost of delivering energy. Utilities must find ways to improve financial forecasting and reduce inefficiencies—tasks well suited for advanced analytics solutions that optimize asset management and detect cost-saving opportunities. Grid Modernization and Infrastructure Investments: Aging infrastructure and increased energy demand require significant investments in modernization. Data-driven insights help utilities prioritize infrastructure upgrades, preventing costly failures and ensuring reliability. Predictive analytics models play a crucial role in identifying patterns that signal potential grid failures before they occur. Customer Expectations and Energy Transition: Consumers are more engaged than ever, demanding personalized service, real-time billing insights, and renewable energy options. Utilities must leverage advanced analytics to segment customer data, predict energy usage, and offer tailored solutions that align with shifting consumer preferences. Rising Fraud: Account takeover fraud, a form of identity theft where cybercriminals obtain credentials to online accounts, is on the rise in the utility sector. Pacific Gas and Electric Company reported over 26,000 reports of scam attempts in 2024 and has received over 1,700 reports of attempted scams in January 2025 alone. Utility and energy providers must leverage advanced fraud detection and identity verification tools to protect their customers and also their business. How Data Analytics Is Transforming the Utilities Industry Optimizing Revenue and Reducing Fraud Fraud and revenue leakage remain significant challenges. Utilities can use data and modeling to detect anomalies in energy usage, identify fraudulent accounts, and minimize losses. Experian’s predictive modeling solutions enable proactive fraud detection, ensuring financial stability for providers. Enhancing Demand Forecasting and Load Balancing With renewable energy sources fluctuating daily, accurate demand forecasting is critical. By leveraging utility analytics, providers can predict peak demand periods, optimize energy distribution, and reduce waste. Improving Credit Risk and Payment Management Economic uncertainty increases the risk of late or unpaid bills. Experian’s energy and utilities solutions help providers assess creditworthiness and develop more flexible payment plans, reducing bad debt while improving customer satisfaction. Why Experian? The Power of Data-Driven Decision Making Only Experian delivers a comprehensive suite of advanced analytics solutions that help utilities make smarter, faster, and more informed decisions. With more than 25 years of experience in the energy and utility industry, we are your partner of choice. Our predictive analytics models provide real-time risk assessment, fraud detection, and customer insights, ensuring utilities can confidently navigate today’s economic and regulatory challenges. In an industry defined by complexity and change, utilities that fail to leverage data analytics in utilities risk falling behind. From optimizing operations to enhancing customer engagement, the power of utility analytics is undeniable. Now is the time to act. Explore how Experian’s energy and utilities solutions can help your organization harness the power of advanced analytics to navigate market challenges and drive long-term success. Learn more Partner with our team

In a financial world that's increasingly connected and complex, monitoring transactions is not just good business practice — it's a regulatory necessity. Anti-money laundering (AML) transaction monitoring stands as a crucial barrier against financial crimes, which ensures the integrity of financial systems worldwide. For financial institutions, the challenges of AML compliance and the tools to meet them continue to evolve. In this blog post, we'll walk through the basics, best practices, and future of AML transaction monitoring. What is AML transaction monitoring? AML transaction monitoring refers to the systems and processes financial institutions use to detect and report potentially suspicious transactions to the Financial Crimes Enforcement Network (FinCEN) under the United States Department of Treasury, which spearheads the efforts to track financial crimes — money laundering and financing of criminal or terrorist activities. By continuously monitoring customer transactions and establishing patterns of behavior, suspicious activities can be identified for further investigation. The role of AML transaction monitoring AML transaction monitoring identifies potential criminal activities and helps maintain a clean and efficient financial ecosystem. By being proactive in preventing the misuse of services, organizations can protect their reputation, strengthen customer trust, and uphold regulatory requirements. The challenge of false positives However, AML compliance is not without challenges. The systems in place often produce many 'false positives', transactions identified as potentially suspicious that, after investigation, turn out to be mundane. These false alarms can overwhelm compliance departments, leading to inefficiency and potentially missing real red flags. Why is AML transaction monitoring important? Understanding the importance of AML transaction monitoring requires a broader look at the implications of financial crimes. Money laundering often supports other serious crimes such as drug trafficking, fraud, and even terrorism. The ability to interrupt the flow of illicit funds also disrupts these additional criminal networks. Furthermore, for organizations, the cost of non-compliance can be substantial — financially and reputationally. Penalties for inadequate AML controls can be hefty, signaling the need for robust monitoring systems. Specifics on compliance Compliance with AML regulations is not a choice but a must. Financial institutions are required to comply with AML laws and regulations to protect their businesses and the industry as a whole. This includes understanding and adhering to regulation changes, which can be complex and have significant operational impacts. How does AML transaction monitoring work? There are two main approaches to transaction monitoring: Rule-based systems: These rely on pre-defined rules that flag transactions exceeding certain thresholds, originating from high-risk countries, or involving specific types of activities. Scenario-based systems: These use more sophisticated algorithms to analyze transaction patterns and identify anomalies that might not be captured by simple rules. This can include analyzing customer behavior, source of funds, and the purpose of transactions. Most organizations use a combination of both approaches. Transaction monitoring software is a valuable tool, but it's important to remember that it's not a foolproof solution. Human analysis is still essential to investigate flagged transactions and determine if they are truly suspicious. Implementing AML transaction monitoring solutions Implementing a robust AML transaction monitoring system requires the right technology and the right strategy. Beyond the software, it's about embedding a culture of compliance within the organization. Choosing the right AML solution The right AML solution should be based on the specific needs of the institution, the complexity of its operations, and the sophistication of the fraud landscape it faces. It's imperative to pick a solution that is agile, scalable, and integrates seamlessly with existing systems. Leveraging KYC and CIP programs Know your customer (KYC) and customer identification program (CIP) are deeply connected to transaction monitoring. Implementing a robust KYC program helps to establish a strong customer identity, whereas a solid CIP ensures that essential customer information is verified at the time of account opening. Automation and AI in AML compliance Automation and AI are revolutionizing AML compliance, especially in transaction monitoring. AI systems, with their ability to learn and evolve, can significantly reduce false positives, making the compliance process more efficient and effective. Advanced AML solutions and the future Technological advancements are constantly reshaping the AML landscape, including solutions incorporating big data analysis and machine learning. Utilizing big data for better insights: Big data analytics provides an unprecedented ability to spot potential money laundering by analyzing vast amounts of transactional data, allowing for better contextual understanding and the ability to identify patterns of suspicious activity. Machine learning and predictive analytics: Machine learning technologies have the potential to refine transaction monitoring by continuously learning new behaviors and adapting to evolving threats. Predictive analytics can help in identifying potential risks well in advance and taking pre-emptive actions. The human element in AML Despite the advancing technology, the human element remains crucial. AML systems are only as good as the people who operate them. Organizations must invest in: Continuous training and skill development: Continuous training ensures that employees remain updated on regulations, compliance techniques, and the latest tools. Developing a team with AML expertise is an investment in the institution's security and success. Cultivating a compliance culture: Cultivating a corporate culture that values compliance is vital. From the highest levels of management to front-line staff, a mindset that embraces the duty to protect against financial crime is a powerful asset in maintaining an effective AML program. How we can help As a leader in fraud prevention and identity verification, Experian’s AML solutions can help you increase the effectiveness of your AML program to efficiently comply with federal and international AML regulations while safeguarding your organization from financial crime. We provide data, models, and automated systems and processes to monitor, detect, investigate, document and report potential money laundering activities across the entire customer lifecycle. Learn more about Experian’s AML solutions *This article includes content created by an AI language model and is intended to provide general information.

Automation, artificial intelligence and machine learning are at the forefront of the continued digital transformation within the world of collections. And organizations from across industries — including healthcare, financial services and the public sector — are learning how automated debt collection can improve their workflows and strategies. When implemented well, automation can ease pressure from call center agents, which can be especially important when there's a tight labor market and retention is top of mind for every employer. Automated systems can also help improve recovery rates while minimizing the risk of human error and the corresponding liability. These same systems can increase long-term customer satisfaction and lifetime value. Deeper insights into consumers' financial situations and preferences allow you to avoid wasting resources and making contact when consumers are truly unable to pay. Instead, monitoring and following up with their preferred contact method can be a more successful approach — and a better experience for consumers. Three tips for automated debt collection Automation and artificial intelligence (AI) aren't new to collections. You may have heard about or tried automated dialing systems, chatbots, text message services and virtual negotiators. But the following three points can be important to consider as the technology and compliance landscapes change. 1. Good automation depends on good data Whether you're using static automated systems to improve efficiencies or using a machine learning model that will adapt over time, the data you feed into the system needs to be accurate. The data can be internal, from call center agents and your customers, and external sources can help verify and expand on what you know. With your internal systems, consider how you can automate processes to limit human errors. For example, you may be able to auto-fill contact information for customers and agents — saving them time and avoiding typos that can cause issues later. External data sources can be helpful in several ways. You can use third-party data as a complementary resource to help determine the best address, phone number or email address to increase right-party contact (RPC) rates. External sources can also validate your internal data and automatically highlight errors or potentially outdated information, which can be important for maintaining compliance. Robust and frequently updated datasets can make your collection efforts more efficient and effective. An automated system could be notified when a debtor resurfaces or gets a new job, triggering new reminders or requests for payment. And if you're using the right tools, you can automatically route the account to internal or external servicing and prioritize accounts based on the consumer's propensity to pay or the expected recovery amount. LEARN MORE: Advanced analytics involves using sophisticated techniques and tools to analyze complex datasets and extract valuable insights. Learn about the benefits of advanced analytics in delinquent debt collection. 2. Expand consumers' communication options and choices Your automated systems can suggest when and who to contact, but you'll also want them to recommend the best way to contact consumers. An omnichannel strategy and digital-first approach is increasingly the preferred method by consumers, who have become more accustomed to online communications and services. In fact, companies with omnichannel customer engagement strategies retain on average 89% of their customers compared to 33% of retention rates for companies with weak omnichannel strategies. Organizations can benefit by using alternative communication methods, such as push notifications, as part of an AI-driven automated process. These can be unobtrusive reminders that gently nudge customers without bothering them, and send them to self-cure portals. Many consumers may need to review the payment options before committing — perhaps they need to check their account balances or ask friends or family for help. Self-service options through an app or web portal can give them choices, such as a single payment or payment plan, without having to involve a live agent. 3. Maintaining compliance must be a priority Organizations need to be ready to adjust to a rapidly changing compliance environment. Over the last few years, organizations have also had to react to changes that can impact Telephone Consumer Protection Act (TCPA) compliance. The automated systems you use should be nimble enough to comply with required changes, and they should be able to support your overall operation's compliance. In particular, you may want to focus on how automated systems collect, verify, safeguard and send consumers' personal information. Why partner with Experian? Whether you're looking to explore or expand your use of automated systems in your collection efforts, you want to make sure you're taking the right approach. Experian helps clients balance effective collections and a great customer experience within their given constraints, including limited budgets and regulatory compliance. The Experian Ascend Intelligence Platform and award-winning PowerCurve® Collections solutions are also making AI-driven automated systems accessible to more lenders and collectors than ever before. Taking a closer look at Experian's offerings, we can focus on three particular areas: Industry-leading data sources Experian's data sources go well beyond the consumer credit database, which has information on over 245 million consumers. Clients can also benefit from alternative financial services data, rental payment data, modeled income estimates, information on collateral and skip tracing data. And real-time access to information from over 5,000 local exchange carriers, which can help you validate phone ownership and phone type. Tools for maximizing recovery rates Experian helps clients turn data into insights and decisions to determine the best next step. Some of Experian's offerings include: Collection AdvantageSM: A one-stop shop for comprehensive and efficient debt collection, Collection AdvantageSM allows you to segment, prioritize and make contact on collections accounts by leveraging speciality collection scoring models. PriorityScore for CollectionsSM: Over 60 industry-specific debt recovery scores that can help you prioritize accounts based on the likelihood to pay or expected recovery amount. RecoveryScore 2.0: Helps you prioritize charged-off accounts based on collectability. TrueTrace™ and TrueTrace Live™: Find consumers based on real-time contact information. We've seen a 10 percent lift in RPC with clients who use Experian's locating tools, TrueTrace or TrueTrace Live. Collection Triggers℠: Sometimes, waiting is the best option. And with an account monitoring tool like Collection Triggers℠, you'll automatically get notified when it makes sense to reach out. RPC contact scores: Tools like Phone Number ID™ and Contact Monitor™ can track phone numbers, ownership and line type to determine how to contact consumers. Real-time data can also increase your RPC rates while limiting your risk. LEARN MORE: See how Collection Triggers can help you establish a more profitable debt collection strategy to increase recovery rates. You can use these, and other, tools to prioritize collection efforts. Experian clients also use different types of scores that aren't always associated with collections to segment and prioritize their collection efforts, including bankruptcy and traditional credit-based scores. Custom models based on internal and external scores can also be beneficial, which Experian can help you build, improve and house. Prioritize collections activities with confidence Collections optimization comes down to making the right contact at the right time via the right channel. Equally important is making sure you're not running afoul of regulations by making the wrong contact. Experian's data standards and hygiene measures can help you: Identify consumers who require special handling Validate email addresses and identify work email addresses Get notified when a line type or phone ownership changes Append new contact information to a consumer's file Know when to reach out to consumers to update contact information and permissions Recommend the best way to reach consumers Automated tools can make these efforts easier and more accurate, leading to a better consumer experience that increases the customer's lifetime value and maximizes your recovery efforts. Learn more

The economic volatility of the last several years has left local, state, and even federal budgets tighter than usual, meaning agencies must collect every dollar owed and do it efficiently. So how do agencies continue to deliver the services citizens expect and have given their tax dollars to support? It starts with an efficient, effective collections strategy. The need for collections An important source of revenue for many government agencies is overdue obligations. These might include: Business, personal, and property taxesChild supportFinesCourt fees By collecting on these obligations – and doing so efficiently – agencies can better fund themselves to serve their citizens. Debt collections process While many agencies are, at least initially, responsible for their debt management efforts, there are many layers to the collections process. Step 1: The agency manages the collections process independently (manually or automatically). Step 2: The Bureau of Fiscal Service takes over servicing delinquent debts and work with the debtor to pay it, suspend it, or end collections efforts. Step 3: The debt may be sent to a Private Collection Agency (PCA). Better collections with better data To collect effectively, agencies need to prioritize and streamline debt assessment and collection, which starts with better data. First, better data – like the data provided via skip tracing – enables better management of data surrounding moves, name changes, changes in marital status, and more, all of which makes for better collections efforts. Second is prioritizing collections efforts to focus on those citizens with the best ability to repay, making the most of existing resources and leveraging automated tools where available. Third is keeping collections efforts compliant with all rules and regulations, which is made easier with the right partner. How Experian can help Experian assists organizations of all shapes and sizes to monitor, segment, and prioritize receivable accounts. We leverage timely and relevant information for greater insight into skip tracing, identify the best times for collections efforts, and monitor, measure, test, and refine strategies to maximize results. To learn more about how Experian can help your agency maximize your collections efforts, visit us or request a call. Learn more

Since January 27, 2020, the federal government has been operating under a Public Health Emergency (PHE) related to the COVID-19 pandemic. On January 14, 2022, this PHE was renewed for an eighth time. While we are currently in the midst of the omicron surge, some suggest that we may be nearing the beginning of the end of the pandemic — and thus the inevitable expiration of the PHE. Impacts of the PHE While the PHE remains in effect, states must maintain current Medicaid enrollees, regardless of changes to their eligibility status. A recent report showed Medicaid enrollment increased 16.8% from February 2020 to June 2021. This is counter to the previous trend, where enrollment declined from 2017 to 2019. Furthermore, the average per capita Medicaid cost to states is estimated at $5K–$10K (states share about one-third of the cost of Medicaid). The combination of the per capita expense and the increased number of enrollees during the pandemic translates to a significant impact on state budgets. Once the federal order expires, states will have 12 months to redetermine eligibility for continued enrollment in the program, or risk bearing 100% of the associated cost. Processing redetermination in a timely manner is critical for states to avoid unnecessary expenditures and to ensure that citizens are receiving access to the correct services. It’s imperative that states start planning for redetermination of benefits for continued Medicaid coverage as soon as possible to be prepared to take action at the inevitable conclusion of the PHE. Preparing for redeterminations At the end of the PHE, states will need a system to easily and confidently review their current Medicaid rolls to confirm eligibility. Implementing this system will likely involve working with a trusted partner who can provide tools and advantages such as: Portfolio analysis Real-time analysis Verification of income and employment Compliance adherence Affordability With the correct systems in place, states can act quickly once the PHE ends, saving unnecessary expenditures and providing better services to citizens in need. If your state agency would like to learn more about how Experian can assist with citizen benefit redetermination efforts, visit us or request a call. Learn more

Chatbots, reduction of manual processes and explainability were all hot topics in a recent discussion between Madhurima Khandelwal, Vice President and Head of DataLabs at American Express®, and Eric Haller, Executive Vice President and head of Experian DataLabs. The importance of AI’s role in innovation in the financial services space was the focus of the recent video interview. In the interview, Khandelwal highlighted some of the latest in what American Express DataLabs is working on to continue to solve complex challenges by building tools driven by AI and Machine Learning: Natural language processing has come a long way in even the last few years. Khandelwal discussed how chat bots and conversational AI can automate the simple to complex to enhance customer experience. Document recognition and processing is another leading-edge innovation that is useful for extracting and analyzing information, which saves staff countless manual hours, Khandelwal said. Fairness and explainability are consistently brought to the forefront especially in financial services as regulators are looking at ways to prevent AI/ML from causing bias for the consumer. Khandelwal showcased how there is extreme rigor in each part of creating their models and how human oversight and training are primary drivers for how they stay on top of this. As for innovation advice, Khandelwal points out that it’s important to be aware that AI and innovation are not always interchangeable, and companies need to think through whether a problem needs to be solved through AI/ML models before charting ahead. Another major key to the equation is the data. In all use cases, the undercurrent of innovation in any form is dependent on the data being used. Learn more about this topic and what Harry Potter has to do with women in data science. Watch the Interview

The collections landscape is changing as a result of new and upcoming legislation and increased expectations from consumers. Because of this, businesses are looking to create more effective, consumer-focused collections processes while remaining within regulatory guidelines. Our latest tip sheet has insights that can help businesses and agencies optimize their collections efforts and remain compliant, including:   Start with the best data Keep pace with changing regulations Focus on agility Pick the right partner Download the tip sheet to learn how to maximize your collections efforts while reducing costs, avoiding reputational damage and fines, and improving overall engagement. Download tip sheet

The Telephone Consumer Protection Act (TCPA), which regulates telemarketing calls, autodialed calls, prerecorded calls, text messages and unsolicited faxes, was originally passed in 1991. Since that time, there have been many rulings and updates that impact businesses’ ability to maintain TCPA compliance.   Recent TCPA Changes   On December 30, 2020, the Federal Communications Commission (FCC) updated a number of TCPA exemptions, adding call limits and opt-out requirements, and codifying exemptions for calls to residential lines.   These changes, along with other industry changes, have added additional layers of complication to keeping compliant while still optimizing operations and the consumer experience.   Maintaining TCPA Compliance   Businesses who do not maintain TCPA compliance could be subject to a lawsuit and paying out damages, and potential hits to their reputation.   With the right partner in place, businesses can maintain data hygiene and accuracy to increase right-party contact (and reduce wrong-party contact) to keep collections streamlined and improve the customer experience.   Using the right technology in place, it’s easier to:   Monitor and verify consumer contact information for a better customer experience while remaining compliant. Receive and monitor daily notifications about changes in phone ownership information. Maintain compliance with Regulation F by leveraging a complete and accurate database of consumer information.   When searching for a partner, be sure to look for one who offers data scrubbing, phone type indicators, phone number scoring, phone number identity verification, ownership change monitoring, and who has direct access to phone carriers.   To learn more about how the right technology can help your business maintain TCPA compliance, visit us or request a call. Learn more

Since 2002, lenders have been aware of the importance of Know Your Customer (KYC) and the associated Customer Identification Program (CIP) requirements. As COVID-19 has changed procedures and priorities for businesses and consumers across the board, it’s more important than ever for institutions to ensure their CIP process includes ongoing monitoring of identity risk.   What is CIP?   Standard KYC programs include a Customer Identification Program to verify and validate identities along with due diligence to assess the risks associated with each identity.   CIP defines the process by which a business collects data to establish a reasonable belief that the identity is valid, and that the individual is eligible to participate in our financial system. While this process works in conjunction with other fraud mitigation tactics, they serve different purposes. A good CIP program emphasizes the customer experience, regulatory compliance, cost control, and smart growth. Fraud mitigation focuses on ensuring that an eligible identity is being presented by its true owner, rather than as part of a scheme to acquire goods and services with intent to default on repayment obligations.   Businesses who focus on solely on fraud mitigation rather than complying with KYC and CIP regulations run the risk of potential harm to business reputation, and of course, financial penalties. Fenergo found that as of the end of 2019, global penalties for AML and KYC non-compliance totaled $36 billion.   CIP vs. Fraud Mitigation Many financial institutions equate a CIP program with efforts to mitigate fraud. It’s understandable, as both processes include emphasis on the accuracy of an identity as it’s presented by a consumer. It is assumed that only the true owner of the identity would possess the detailed information necessary to meet CIP requirements and therefore would not likely be committing fraud.   There was a time—prior to large scale thefts of stored information, personal details shared through social media and other behavior changes that made personal information very public—when this would have been true. Unfortunately, those days have passed and even an amateur criminal with limited experience and resources could find current, accurate identity information for sale online, information good enough to pass the CIP test and be considered a legitimate consumer.   The real challenge is that when they go through CIP, many real consumers may inadvertently provide true information that doesn’t meet the verification standard. This is a result of consumer lifestyle changes outpacing the sources of data used to verify the information they’ve provided. It makes sense; in most years roughly 13% of American adults change their address. New homes, job changes and changes in marital status impact a large number of people every day. Adding to the confusion—it’s life’s changes that prompt people to borrow and purchase. The result is that many of the people that are more likely to fail CIP verification are the very people trying to legitimately access financial services.   The result is that CIP verification often isn’t a challenge for those intending to commit fraud, but it can be for genuine consumers.   The challenges of CIP In a recent internal study, Experian reviewed the ability to pass a standard CIP strategy that assessed the accuracy of the name, current address, date of birth and Social Security number provided by a large sample of consumers. We then compared legitimate consumers to those later confirmed to have been identity thieves impersonating a victim. Consistently, the identity thieves were at least as proficient at passing CIP as their true-consumer counterparts.   In a second step, we applied a fraud score that looked for identity theft by assessing the past uses of the identities, their consistency, velocity and many other characteristics unrelated to the accuracy of the data. The difference between CIP verification and a fraud risk assessment was striking. Across the entire range of fraud risk, the percentage of records that passed CIP verification remained the same.   That said, CIP still plays a very important role in risk mitigation. In fact, CIP and fraud prevention are inextricable in financial services. Just as a CIP verified identity can still be fraud, a record that may appear to be low fraud risk may not pass CIP. Since both processes have existed side by side for nearly two decades, each presumes that the other is in place and both are necessary to detect and prevent fraud.   Striking a balance   CIP verification and fraud mitigation strategies are both necessary and important to protecting assets and the broader financial system from fraud. It’s important to leverage a layered approach where both eligibility and risk are assessed, and next steps for verification include resolution of identity discrepancies alongside verification that ensures an identity is not being misused for fraud.   Experian can help you confidently verify customer identities, understand and anticipate customer activities, and implement ongoing monitoring. If you’d like to set up a review of your current strategy or learn more about how we can help you with CIP and fraud mitigation to strengthen your ability to know your customer compliantly, let us know. Contact us

According to Experian’s latest Global Insights Report, 38% of consumers expect to increase their online activity in the next 12 months. The report also found that consumers continue to have high expectations for their online experience, and businesses are re-imagining the customer journey to reflect that need. This January, Experian surveyed 3,000 consumers and 900 businesses to explore the changes in consumer behavior and business strategy pre- and post-COVID-19. As consumers have embraced life online, they’ve continued to emphasize their feelings regarding the importance of protecting their information. More than half of consumers still consider security to be the most important factor in their digital experience – the same experience they have such high expectations of. Business are acting in turn, with more than half investing in fraud detection methods or software to reduce friction in the customer experience. Digital transformation is also highlighting the need to: Manage regulatory compliance Integrate security measures Ensure access to AI models Attract and manage customers Integrate automation solutions Download the report to get all the latest insights into consumer desires and business behaviors, and keep visiting the Insights blog for a deeper dive into US-specific findings. Download report  

2020 is finally over – been there, done that. And while it seems safe to say most everyone is all too eager to kick off a new calendar year, the reality is we’re still reeling – and will continue to reel – through the economic impacts of the COVID-19 global pandemic. As we inch closer to the one year marker of when many businesses were sent home – across all industries, including those tech-inclined and those less so – the understatement of the year is that the world has since changed as have consumer communication preferences, how businesses and customers interact, tweaked definitions of privacy, and new (heightened) expectations of evolving a positive customer experience with minimal friction and maximum security. While last year’s predictions of entering a new set of Roaring 20’s may not have panned out the way we had initially imagined, many of the trends thought to evolve over the last 365 days did. As we all look toward a post-pandemic world, here are six top trends to keep tabs on throughout 2021. 1. Data Data as a commodity and as a business differentiating factor has reached an all-time high. It’s doing more across the entire customer lifecycle and can elevate businesses to best prep for growth, especially as consumers begin to look for more financial products (whether looking for financial assistance as the CARES Act accommodation period ends, or to take advantage of the booming mortgage industry, etc.). Data can also give more insights into consumers than ever before. Far beyond just credit scores and financial data, today’s data sets can reveal consumers’ lifestyle preferences, their preferred communication channels, their rental histories, and so much more. With alternative credit data and non-traditional data (including consumer-permissioned data), businesses can get a holistic picture of their customers’ payment behaviors. That streaming media service monthly payment may seem minimal, but now could increase your credit score through Experian Boost. Experian is still making big strides in all efforts to use data for good. As of December 31, 2020, Experian Boost has “boosted” Americans’ credit scores nearly 47 million points. Additionally, throughout 2020, Experian worked with financial institutions and credit furnishers to continue to put consumers first and serve as the consumer’s bureau. Coming up in 2021? Using data for differentiation, which can ultimately drive business growth. From instant prescreens to identifying your best customers (and offering them cross-sell and upsell opportunities to increase retention and customer loyalty) to helping customers that may be on the brink of financial distress and connecting them with management solutions to help them get back on their feet, data can help businesses – and their customers – get there. 2. Fraud and Friction (And the Reduction of Both) With the pandemic, fraud saw increases across the board. Here are just some quick stats: 200% increase in first-time online banking usage immediately following shelter-in-place orders (Aite Group, “Workplace Distancing: Adapting Fraud and AML Operations to COVID-19,” April 2020) 652% year-over-year increase in records found on the dark web (Experian CyberAgent technology) 50% increase in human farming – real people being hired for purposes of fraud – month-over-month in March 2020 (Arkose Labs) And, unsurprisingly, consumer and business sentiments toward fraud are also evolving with these increasing trends. For example, according to Experian’s North America Trends Report, half of consumers continue to site security as the most important factor of their online experience. Additionally, there’s been an increase in the percentage of businesses who have recently increased or are planning to increase fraud budget from 76% in 2019 to 89% as of Sept. 2020. More complex phishing schemes and increased fraudster activity is due in part to numerous industries having to shift to online processes and business transactions overnight. Adoption for mobile wallets has jumped 11% since July 2020, according to the 2020 Global Insights Report. Systems and technology that were not ready or not armed with the necessary infrastructure left critical access points open that could be exploited by fraudsters. Fraud exists across the customer lifecycle, at every access point. And while fraud is complex, with Experian as your partner, solving it isn’t. Innovative technology enables businesses to prevent fraud by identifying credible customers and applying the correct treatment to the riskiest consumer and business accounts. We can help you develop a layered risk management strategy so you can focus resources on growing and protecting your customer relationships. 3. A New Administration – Changing of the Guards on the Regulatory Front With the new year enters the inauguration of a new president and administration. Though there is still much to be determined, certain areas are drawing a lot of attention with this changing of the guards. The highlights? The CFPB. Priorities and leadership could change. With COVID-19 top of mind, it is likely there will be aggressive agendas put forth to help protect the millions of consumers who have suffered economic distress and harm as a result of the pandemic. Data Portability. With an increased consumer appetite to port their data, questions and concerns around data security – and how to verify for a third party asking for the data – are also on the rise. There are a number of issues facing financial institutions around data portability, one of the largest being defining the line between consumer account information and proprietary data. All things privacy – state vs. national bills. The debate continues on how to move forward (whether privacy legislation will be handled by the states or at the national level), but for now it seems there is more progress at the state level. California was the first state to push through state-level privacy legislation in the form of the California Consumer Privacy Act of 2018. Twenty-four states are considering legislation that would require consent before collecting or disclosing personal information with third parties. 4. Analytics + Digitalization – Smarter, Better, Faster COVID-19 accelerated digital transformation for many. Some companies were ready, having already started making the headway in years prior, while others struggled – and some continue to struggle. The pandemic – and its corresponding recovery – is reason now, more than ever, to get some of your digital transformation priorities checked off of your list. Your customers demand it and your business needs it. Tackling analytics and digitalization not only brings your business up to speed, but improves your decisioning, enhances your offerings, and enables better platforms and data usage. In addition to digitalization, artificial intelligence for credit decisioning and personalized banking can also be expected to be a top trend, especially AI that is ethical and explainable, as will the increasing adoption and implementation of cloud computing. As consumer experience continues to reign supreme, any and all technology to enhance and improve that experience – think chatbots and virtual assistants – will also likely increase in presence. 5. Verification & Identity Identity has been a trending topic over the last few years, brought on by increasingly digital lifestyles and the intersection of personalization, frictionless transactions and adequate security. Identity verification and verification of other information such as income, employment and the like are increasingly needed in a today’s pandemic and tomorrow’s post-pandemic world. Leveraged across the lifecycle and during critical customer interactions, the need is especially heightened for insights, data accuracy, and diversification of data sets – to name a few. And while it was already established that identity verification is not just for marketing services, there are now even greater needs for financial institutions to be able to confidently know that their customers are who they say they are. Some areas to keep your eye on in 2021? Identity, income, assets and employment. 6. Redefining the Modern Mortgage As has been a common trend, spurred by the disruption caused by COVID-19, the mortgage industry is one of the many to have a magnifying glass brought to its areas for improvement. Some of those areas include operational efficiency, digital adoption and transparency. In line with the better and faster needs that lenders are continually trying to pace with, the need for speed is hitting mortgage originations, with an ideal situation outlined as closing in 30 days or less. Creating operational efficiencies through faster, fresher data can be the key for lenders to more accurately assess a borrower’s ability to pay upfront. Additionally, now, as most mortgage lenders are breaking previous origination records by a landslide (thanks pandemic), there’s new focus on other performance indicators. With such impetus, the modern mortgage is constantly evolving, incorporating customer-centric facets including a seamless digital process, providing meaningful customer experiences and leveraging the latest and greatest technology to better future-proof the industry through scalable technology, while aiming to reduce costs. For all your needs in 2021 and beyond, Experian has you covered. Learn More

When running a credit report on a new applicant, you must ensure Fair Credit Reporting Act (FCRA) compliance before accessing, using and sharing the collected data. The Coronavirus Aid, Relief, and Economic Security (CARES) Act has impacted credit reporting under the FCRA, as has new guidance from the Consumer Financial Protection Bureau (CFPB). Recent updates include: The CARES Act amended the FCRA to require furnishers who agree to an “accommodation,”1 to report the account as current, although it is permitted to continue to report the account as delinquent if the account was delinquent before the accommodation was made. Although not legally obligated, data furnishers should continue furnishing information to the credit reporting agencies (CRAs) during the COVID-19 crisis, and make sure that information reported is complete and accurate. Below is a brief FCRA-related compliance overview2 covering various FCRA requirements3 when requesting and using consumer credit reports for an extension of credit permissible purpose. For more information regarding your responsibilities under the FCRA as a user of consumer reports, please consult your Legal Counsel and the Notice to Users of Consumer Reports: Obligations of Users Under the FCRA handbook located on our website. Before obtaining a consumer report you have…  Reviewed your federal and state regulations and laws related to consumer reports, scores, decisions, etc.  Made sure you have a valid permissible purpose for pulling the consumer report.  Certified compliance to the CRA from which you are getting the consumer report. You have certified that you complied with all the federal and state requirements. After you take an adverse action based on a consumer report you… Provide the consumer with an oral, written or electronic notice of the adverse action. Provide written or electronic disclosure of the numerical credit score used to take the adverse action, or when providing a “risk-based pricing” notice. Provide the consumer with an oral, written or electronic notice, which includes the below information:  Name, address and telephone number of CRA that supplied the report, if nationwide. A statement that the CRA did not make the adverse decision and therefore can’t explain why the decision was made.  Notice of the consumer’s right to a free copy of their report from the CRA, if requested within 60 days.  Notice of the consumer’s right to dispute with the CRA the accuracy or completeness of any information in a consumer report provided by the CRA. Provide the consumer with a “risk-based pricing” notice if credit was granted but on less favorable terms based on information in their consumer report. We understand how challenging it is to understand and meet all your obligations as a data furnisher – we’re here to make it a little easier. Click below to speak with a representative and gain more insight on how the CARES Act impacts FCRA reporting. Download overview Speak with a representative 1An “accommodation” is defined as “an agreement to defer one or more payments, make a partial payment, forbear any delinquent amounts, modify a loan or contract, or any other assistance or relief” granted to a consumer affected by COVID-19 during the covered period. 2This FCRA overview is not legal guidance and does not enumerate all your requirements under the FCRA as a user of consumer reports. Additionally, this FCRA Overview is not intended to provide legal advice or counsel you regarding your obligations under the FCRA or any other federal or state law or regulation. Should you have any questions about your institution’s specific obligations under the FCRA or any other federal or state law or regulation, you should consult with your Legal Counsel. 3This FCRA overview is intended to be used solely by financial service providers when extending credit to consumers and does not include all FCRA regulatory obligations. You are responsible for regulatory compliance when requesting and using consumer reports, which includes adhering to all applicable federal and state statutes and regulations and ensuring that you have the correct policies and procedures in place.

One of the most difficult parts of combating fraud is the ability to distinguish between the variety of fraud types. To properly manage your fraud efforts, you need to be able to differentiate between first party fraud and third party fraud so you can determine the best treatment. After all, if you’re treating first party fraud as though it’s third party fraud, the customer you’re contacting for verification will give whatever information they need to in order to continue their criminal actions. So how do you verify each type of fraud without adding additional overhead or increasing the friction experienced by your customers? Combating Fraud During an Economic Downturn Particularly in times of economic uncertainty, the ability to detect and identify individual fraud types allows you to work to prevent them in the future. Through proper identification, you can also apply the correct treatments to maximize the effectiveness of your fraud response teams, since the treatment for first and third party fraud is different. During the economic upswing, first party fraud was a secondary concern. Businesses were easing friction to help continue growth. Now, the same customers that businesses thought would drive growth are hurting and unable to help offset the losses caused by bad actors. Now is the time to revisit existing fraud prevention and mitigation strategies to ensure that fraud is properly identified, and the correct treatments are applied. Introducing Precise ID® Model Suite Experian’s Precise ID Model Suite combines identity analytics with advanced fraud risk models to: Protect the entire customer journey again fraud – across account opening, login, maintenance and transactions Distinguish first-party, third-party, and synthetic identity fraud to determine the best next action Enable agility during changing market conditions Maintain regulatory compliance (including: KYC, CIP, GLBA, FCRA, FFIEC, PATRIOT Act, FACTA, and more) Improve overall fraud management strategies and reduce losses Precise ID Model Suite allows you to detect and distinguish types of fraud with a single call – enabling your business to maximize efficiency and eliminate redundancy across your fraud prevention teams. By accurately recognizing risk, and in particular, recognizing that first party fraud is in fact a type of fraud distinct from credit risk, you’re able to protect your portfolio and your customers. Learn more

With new legislation, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act impacting how data furnishers will report accounts, and government relief programs offering payment flexibility, data reporting under the coronavirus (COVID-19) outbreak can be complicated. Especially when it comes to small businesses, many of which are facing sharp declines in consumer demand and an increased need for capital. As part of our recently launched Q&A perspective series, Greg Carmean, Experian’s Director of Product Management and Matt Shubert, Director of Data Science and Modelling, provided insight on how data furnishers can help support small businesses amidst the pandemic while complying with recent regulations. Check out what they had to say: Q: How can data reporters best respond to the COVID-19 global pandemic? GC: Data reporters should make every effort to continue reporting their trade experiences, as losing visibility into account performance could lead to unintended consequences. For small businesses that have been negatively affected by the pandemic, we advise that when providing forbearance, deferrals be reported as “current”, meaning they should not adversely impact the credit scores of those small business accounts. We also recommend that our data reporters stay in close contact with their legal counsel to ensure they follow CARES Act guidelines. Q: How can financial institutions help small businesses during this time? GC: The most critical thing financial institutions can do is ensure that small businesses continue to have access to the capital they need. Financial institutions can help small businesses through deferral of payments on existing loans for businesses that have been most heavily impacted by the COVID-19 crisis. Small Business Administration (SBA) lenders can also help small businesses take advantage of government relief programs, like the Payment Protection Program (PPP), available through the CARES Act that provides forgiveness on up to 75% of payroll expenses and 25% of other qualifying expenses. Q: How do financial institutions maintain data accuracy while also protecting consumers and small businesses who may be undergoing financial stress at this time? GC: Following bureau recommendations regarding data reporting will be critical to ensure that businesses are being treated fairly and that the tools lenders depend on continue to provide value. The COVID-19 crisis also provides a great opportunity for lenders to educate their small business customers on their business credit. Experian has made free business credit reports available to every business across the country to help small business owners ensure the information lenders are using in their credit decisioning is up-to-date and accurate. Q: What is the smartest next play for financial institutions? GC: Experian has several resources that lenders can leverage, including Experian’s COVID-19 Business Risk Index which identifies the industries and geographies that have been most impacted by the COVID crisis. We also have scores and alerts that can help financial institutions gain greater insights into how the pandemic may impact their portfolios, especially for accounts with the greatest immediate exposure and need. MS: To help small businesses weather the storm, financial institutions should make it simple and efficient for them to access the loans and credit they need to survive. With cash flow to help bridge the gap or resume normal operations, small businesses can be more effective in their recovery processes and more easily comply with new legislation. Finances offer the support needed to augment currently reduced cash flows and provide the stability needed to be successful when a return to a more normal business environment occurs. At Experian, we’re closely monitoring the updates around the coronavirus outbreak and its widespread impact on both consumers and businesses. We will continue to share industry-leading insights to help data furnishers navigate and successfully respond to the current environment. Learn more About Our Experts Greg Carmean, Director of Product Management, Experian Business Information Services, North America Greg has over 20 years of experience in the information industry specializing in commercial risk management services. In his current role, he is responsible for managing multiple product initiatives including Experian’s Small Business Financial Exchange (SBFE), domestic and international commercial reports and Corporate Linkage. Recently, he managed the development and launch of Experian’s Global Data Network product line, a commercial data environment that provides a single source of up to date international credit and firmographic information from Experian commercial bureaus and Tier 1 partners across the globe. Matt Shubert, Director of Data Science and Modelling, Experian Data Analytics, North America Matt leads Experian’s Commercial Data Sciences Team which consists of a combination of data scientists, data engineers and statistical model developers. The Commercial Data Science Team is responsible for the development of attributes and models in support of Experian’s BIS business unit. Matt’s 15+ years of experience leading data science and model development efforts within some of the largest global financial institutions gives our clients access to a wealth of knowledge to discover the hidden ROI within their own data.  

Article written by Alex Lintner, Experian's Group President of Consumer Information Services and Sandy Anderson, Experian's Senior Vice President of Client and Sales Operations Many consumers are facing financial stress due to unemployment and other hardships related to the COVID-19 pandemic. Not surprisingly, data scientists at Experian are looking into how consumers’ credit scores may be impacted during the COVID-19 national emergency period as financial institutions and credit bureaus follow guidance from financial regulators and law established in Section 4021 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). In a nutshell, Experian finds that if consumers contact their lenders and are granted an accommodation, such as a payment holiday or forbearance, and lenders report the accommodation accordingly, consumer scores will not be materially affected negatively. It’s not just Experian’s findings, but also those of the major credit scoring companies, FICO® and VantageScore®. FICO has reported that if a lender provides an accommodation and payments are reported on time consistent with the CARES Act, consumers will not be negatively impacted by late payments related to COVID-19. VantageScore® has also addressed this issue and stated that its models are designed to mitigate the impact of missed payments from COVID-19. At the same time, if as predicted, lenders tighten underwriting standards following 11 consecutive years of economic growth, access to credit for some consumers may be curtailed notwithstanding their score because their ability to repay the loan may be diminished. Regulatory guidance and law provide a robust response Recently, the Federal Reserve, along with the federal and state banking regulators, issued a statement encouraging mortgage servicers to work with struggling homeowners affected by the COVID-19 national emergency by allowing borrowers to defer mortgage payments up to 180-days or longer. The Federal Deposit Insurance Corporation stated that financial institutions should “take prudent steps to assist customers and communities affected by COVID-19.” The Office of the Comptroller of the Currency, which regulates nationally chartered banks, encouraged banks to offer consumers payment accommodations to avoid delinquencies and negative credit bureau reporting. This regulatory guidance was backed by Congress in passing the CARES Act, which requires any payment accommodations to be reported to a credit bureau as “current.” The Consumer Financial Protection Bureau, which has oversight of all financial service providers, reinforced the regulatory obligation in the CARES Act. In a statement, the Bureau said “the continuation of reporting such accurate payment information produces substantial benefits for consumers, users of consumer reports and the economy as a whole.” Moreover, the consumer reporting industry has a history of successful coordination during emergency circumstances, like COVID-19, and we’ve provided the support necessary for lenders to report accurately and consistent with regulatory guidance. For example, when a consumer faces hardship, a lender can add a code that indicates a customer or borrower has been “affected by natural or declared disaster.” If a lender uses this or a similar code, a notification about the disaster or other event will appear in the credit report with the trade line for the customer’s account and will remain on the trade line until the lender removes it. As a result, the presence of the code will not negatively impact the consumer credit score. However, other factors may impact a consumer’s score, such as an increase in a consumer’s utilization of their credit lines, which is a likely scenario during a period of financial stress. Suppression or Deletion of late payments will hurt, not help, credit scores In response to the nationwide impact of COVID-19, some lawmakers have suggested that lenders should not report missed payments or that credit bureaus should delete them. The presumption is that these actions would hold consumers harmless during the crisis caused by this pandemic. However, these good intentions end up having a detrimental impact on the whole credit ecosystem as consumer credit information is no longer accurately reflecting consumers’ specific situation. This makes it difficult for lenders to assess risk and for consumers to obtain appropriately priced credit. Ultimately, the best way to help is a consumer-specific solution, meaning one in which a lender reaches an accommodation with each affected individual, and accurately reflects that person’s unique situation when reporting to credit bureaus. When a consumer misses a payment, the information doesn’t end up on a credit report immediately. Most payments are monthly, so a consumer’s payment history with a financial institution is updated on a similar timeline. If, for example, a lender was required to suppress reporting for three months during the COVID-19 national emergency, the result would be no data flowing onto a credit report for three months. A credit report would therefore show monthly payments and then three months of no updates. The same would be true if a credit reporting agency were required to suppress or delete payment information. The lack of data, due to suppression or deletion, means that lenders would be blinded when making credit decisions, for example to increase a credit limit to an existing customer or to grant a new line of credit to a prospective customer. When faced with a blind spot, and unable to assess the real risk of a consumer’s credit history, the prudential tendency would be to raise the cost of credit, or to decrease the availability of credit, to cover the risk that cannot be measured. This could effectively end granting of credit to new customers, further stifling economic recovery and consumer financial health at a time when it’s needed most. Beyond the direct impact on consumers, suppression or deletion of credit information could directly affect the safety and soundness of the nation’s consumer and small business lending system. With missing data, lenders and their regulators would be flying blind as to the accurate information about a consumer’s risk and could result in unknowingly holding loan portfolios with heightened risk for loss. Too many unexpected losses threaten the balance of the financial system and could further seize credit markets. Experian is committed to helping consumers manage their credit and working with lenders on how best to report consumer-specific solutions. To learn more about what consumers can do to manage credit during the COVID-19 national emergency, we’ve provided resources on our website. For individuals looking to explore options their lenders may offer, we’ve included links to many of the companies and update them continuously. With good public policy and consumer-specific solutions, consumers can continue to build credit and help our economy grow.