Digital information is playing an increasingly important role in debtors’ lives and therefore in New York bankruptcy. For example, everyone knows about credit scores, but few know the relationship between credit scores and romance. Data analytics has even produced “bankruptcy risk scores” to help lenders estimate the likelihood that debtors will file bankruptcy. Even less well known are “e-scores,” which are also known as “consumer valuation scores” or “buying power scores.” What are these and what are their implications for debtors?
According to a 2012 New York Times article on the subject, an e-score measures a person’s “potential value as a customer” to a business. It does so by gathering the kinds of location and demographic information of consumers that all scores rely on and then add known spending habits. One of its primary uses is targeted advertising—those credit card offers you get in the mail and probably promptly toss. People with higher e-scores receive the ads for platinum credit cards while those with lower scores get the offers for cards with fewer perks. The Times article raises concerns about the scores’ lack of regulations, unlike credit scores, and discrimination against poor people who have lower scores. Indeed, one advantage of e-scores to businesses is sifting out people they don’t want as patrons.
So obviously, absent regulations, many people including distressed debtors might not know about product options that would benefit them. There are other disadvantages as well. For instance, some e-score companies offer “credit risk assessment” resources with a goal of creating enhanced credit scores. It’s unclear if these super-scores are protected by federal regulations, and there’s no way for debtors to figure out what they are. On top of that, e-score businesses also offer their services to collection agencies, which can use e-scores to predict which debtors are easiest to contact, how likely they are to pay, and the probabilities of litigation outcomes.
Because there’s no real way for people to know what their e-scores are, there isn’t much they can do to improve them. However, it’s clear that in the future scores like them will play greater roles in debtors’ lives, either giving them better financial-product options, or putting them at the top of a debt collector’s calling queue.
The New York Times article on e-scores is here.
E-scores don’t take away any remedies debtors may have against unscrupulous businesses. Debt collectors that violate the Fair Debt Collection Practices Act or Telephone Consumer Protection Act or bankruptcy discharge orders are still liable for their acts. If you believe a business is harassing you about a discharged debt, or if your debts are becoming too difficult to manage, then talking to an experienced New York bankruptcy lawyer can help. An e-score will not protect creditors from a bankruptcy filing.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.
