It’s actually quite amazing that we got the Fair Credit Reporting Act. It has real teeth. The only similar thing in the last 15 years was Dodd Frank and the CFPB. Something like the FCRA for privacy would be amazing.
Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
11–20 of 29 posts
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#12It's relatively inexpensive for these companies to stay out of regulatory purview, at the cost of a few hundred thousand dollars each election cycle. https://www.fec.gov/data/receipts/?data_type=processed&contr...
The idea that these companies escape scrutiny because of a $1k donation is truly silly. Think harder about this.
The $1k is just an understanding that says "we provide a somewhat unsavory but necessary service to the country (with pretty shitty service to boot) -- it might not be hard for you to kill us (we're not popular and could easily be scapegoated for any number of crimes) but unless you replace us with something better in the process you will risk creating chaos and then voters will toss you out".
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#13These behemoths are a major vertebrae in the backbone of the US economy. Without Equifax, Transunion, Experian and Dun & Bradstreet a huge portion of economic activity would come to a grinding halt. The vast majority of sales of housing, cars, computers, phones, hot tubs, etc. are all reliant on on-demand credit scoring. We have made serious strides in regulating them, but disbanding them would be a financial disaster. Regulation has actually made the problem a bit worse since it has essentially turned the credit reporting industry into an oligopoly, further centralizing consumer data collection so attackers only have to hit a single target to get almost everything.
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#14CRAs maintain consumer credit scores which support consumer borrowing and lending - a large part of the US financial system. Experian could have (and perhaps should have) been disbanded after their data breach, but if you disband the category, who or what replaces it to track consumer creditworthiness?
Beyond credit scores, there's been a proliferation of "Know Your Customer" (KYC) requirements to reduce fraud and money laundering. The most common form of KYC is called "Knowledge Based Authentication" (KBA). This is when they ask you a series of multiple choice questions about previous addresses, schools, and employers. You usually have to get 4 out of 5 right to "pass". I paid cash for a new car from a Jeep dealership - before they'd complete the transaction, I had to pass KBA from Experian. I believe it was a state law that imposed the requirement.
I don't think it's practical to argue for the extinction of CRAs as a category. I do think it's practical to give consumers more control over their data - what is stored and where it goes. I've been tinkering on solutions for this, as have quite a few others in the data privacy community as well.
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#15First, Why they exist:
Banks share data with these services, so that all banks can mitigate risk.
Effectively, with all the banks providing information about their customers they can determine “future credit worthiness”.
It’s gone a bit further now and merchants can report you not paying and banks encourage every more data collection.
Banks that didn’t / don’t do this kinda of background check are actually breaking the law (KYC - “know your customer” - at least since 9/11, possibly before). As you could be providing funds to a terrorist (and that’s highly illegal).
To summarize, through regulation the government has strongly encouraged if not outright required these firms to exist.
To answer they question why haven’t disbanded them, well we don’t have the means to. Banks fund / elect politicians and if you step out of line (as kanye west did recently), they’ll debank and “cancel” you. Some politicians will push back on this; but it is rare and most have independent support (base, external large donor, ete)
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#16It's relatively inexpensive for these companies to stay out of regulatory purview, at the cost of a few hundred thousand dollars each election cycle. https://www.fec.gov/data/receipts/?data_type=processed&contr...
The idea that these companies escape scrutiny because of a $1k donation is truly silly. Think harder about this. The $1k is just an understanding that says "we provide a somewhat unsavory but necessary service to the country (with pretty shitty service to boot) -- it might not be hard for you to kill us (we're not popular and could easily be scapegoated for any number of crimes) but unless you replace us with somethi…
The actual money used by the corporate entity Equifax toward election campaigning is unknowable thanks to Citizens United - for example, Equifax could independently fund as many attack ads against as many political candidates as it would like, without reporting any of that spending to the FEC, as long as it does not coordinate with candidate committees.
Even if we assume there is no additional benefit to a candidate aside from the $1k contribution on paper, keep in mind most of this comes from Equifax employees with individual contribution limits - note that the CEO and every VP/high exec contribute the maximum $2700/$5000 limit each cycle.
https://www.fec.gov/data/receipts/?cycle=2018&data_type=proc...
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#17CRAs maintain consumer credit scores which support consumer borrowing and lending - a large part of the US financial system. Experian could have (and perhaps should have) been disbanded after their data breach, but if you disband the category, who or what replaces it to track consumer creditworthiness? Beyond credit scores, there's been a proliferation of "Know Your Customer" (KYC) requirements to reduce fraud and mo…
I think the existence of KBA is kind of an anti-pattern compared to Estonia-style identity. If we respected our privacy and never let data brokers collect all that information in the first place then KBA would never have been invented.
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#18The same credit reporting agencies exist for corporations, too: S&P Global ratings and Moody’s
There's also Fitch and at least one other that escapes me. Barra, maybe? More if you go international.
They also rate governments for municipals to countries.
I used to deal with issuer ratings quite extensively several jobs ago. Been away from it for about a decade, though.
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#19CRAs maintain consumer credit scores which support consumer borrowing and lending - a large part of the US financial system. Experian could have (and perhaps should have) been disbanded after their data breach, but if you disband the category, who or what replaces it to track consumer creditworthiness? Beyond credit scores, there's been a proliferation of "Know Your Customer" (KYC) requirements to reduce fraud and mo…
I think the existence of KBA is kind of an anti-pattern compared to Estonia-style identity. If we respected our privacy and never let data brokers collect all that information in the first place then KBA would never have been invented.
I did find it odd that the dealership couldn't accept my state-issued ID for ID validation. Maybe there's some regulatory capture at work there. Even if state-issued ID docs were accepted, that would solve for KYC but not for credit scoring.
Re: Ask HN: Why do we allow Equifax, Transunion, and Experian to exist?
#20To get an overview of these (toxic IMHO) companies, I strongly recommend this episode of Last Week Tonight: