Selling Consumers, Not Lists: The New World of Digital Decision-Making and the Role of the Fair Credit Reporting Act

Abstract

This paper explores the new world of financial decision-making that draws on a range of Internet techniques. While some practices are being regulated as traditional credit reports under the Fair Credit Reporting Act, credit bureaus and other financial firms are expanding into currently non-regulated areas, including online marketing and sales. Does the FCRA need to be updated to address the growing use of real-time database scoring and decision-making on the Internet? Where is the line drawn between when an online real-time decision-making score is used simply to serve advertising for a financial product or to make a decision about “establishing the consumer’s eligibility” for credit? When an online profile is used for “establishing the consumer’s eligibility” for credit, does it become a consumer report? As financial firms use powerful digital tools to precisely identify and market to potential customers in real-time, are they compiling prescreened lists actionable under the FCRA?