Fighting fire with fire, data with data

We all know that companies buy and sell databases of information about us.  They use it to make marketing decisions, including how to identify people who are looking to refinance their homes.  There are certainly interesting questions these practices raise about personal information and privacy, but more immediately, as this article makes clear, data mining can have real-life, adverse and sometimes devastating consequences for ordinary people.For example, when Mercurion Suladdin, a county librarian in Utah, filled out an application to refinance her home at Ameriquest, “she quickly got a call from a salesman at Beneficial, a division of HSBC bank where she had taken out a previous loan.”

The salesman said he desperately wanted to keep her business. To get the deal, he drove to her house from nearby Salt Lake City and offered her a free Ford Taurus at signing.What she thought was a fixed-interest rate mortgage soon adjusted upward, and Ms. Suladdin fell behind on her payments and came close to foreclosure before Utah’s attorney general and the activist group Acorn interceded on behalf of her and other homeowners in the state.“I was being bombarded by so many offers that, after a while, it just got more and more confusing,” she says of her ill-fated decision not to carefully read the fine print on her loan documents.

HSBC knew she was a good target because of products offered by data vendors, like "mortgage triggers" and "TargetPoint Predictive Triggers" from Equifax, which “advertises 'advanced profiling techniques' to identify people who show a 'statistical propensity to acquire new credit' within 90 days.”Data brokers and lenders defend themselves by saying they are offering a service similar to a second opinion from a doctor.  It’s a good point, especially when you consider that a good doctor would never recommend an alternative treatment without going over all the risks and possible side-effects.  The question isn’t whether it was right or not to give her options; the question is whether she had enough information to weigh those options, especially in comparison to all the information HSBC had about her.The Internet Age allows all of us to have so much information all the time, but the kind of power that comes with data mining and data analysis tools belongs overwhelmingly to banks, search engine companies, and insurance companies, and not at all to to individuals and consumer protection organizations.  Sure, Ms. Suladdin could have tried to Google “HSBC Beneficial risks?”, but that pales in comparison to what HBSC Beneficial was able to do with her data.Imagine if she had had data analytic tools similar to her bank's.  I’m not talking about the ability to go to some online forum to ask questions about mortgages.  What if she had been able to access a database that would tell her what kind of mortgages others like her had received?  Or what was statistically likely to happen to interest rates?  Or a combination of these factors?Or think about all these nonprofit organizations working hard to deal with the subprime mortgage crisis and the rapidly increasing rate of foreclosures.  Like many nonprofits that offer a service, the first step is to identify the people who need their help and notify them these services exist--not very different from what a business has to do in its marketing strategy.  Why shouldn’t nonprofits have access to the same data as the companies that offered those mortgages to these people in the first place?Anyone who has read this blog knows, we don’t believe in fighting bad uses of data by shutting down data collection altogether.  Let’s fight fire with fire, data with data.