What does your credit card company know about you?
May 15, 2009 by Todd Murray · Leave a Comment
The New York Times has a fascinating (and somewhat scary) article about the data mining techniques that many credit card companies use to calculate risk. Credit card companies collect vast amounts of data about their customers’ backgrounds and purchases and use it to determine which customers are likely to pay their balances and which are likely to default. The article reveals that the Capital One “card lab” is really just “an experiment” designed to collect data about customers’ values and choices and use it to assess risk.
The author also attended a training session for new collection employees at one major credit card issuer. It seems credit card companies are taking a kindler and gentler approach when it comes to debt collection. Not necessarily because its the right thing to do, but because research has shown that empathizing with (and occasionally manipulating) customers increases the likelihood of payment.
The article is somewhat long, but it is well-worth your time.