WHITEPAPER
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HEADER FILE
How Your Business Can Use
Unregulated Data to Boost Revenue,
Increase Agility and Reduce Risk
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Table of
Contents
Executive Summary ................................................................................02
Introduction ...........................................................................................03
How Data Regulations Apply to You: A Brief History Lesson .........................04
When (and When Not) to Use Regulated Data.............................................06
Four Ways Your Business Can Benefit from Unregulated Data ......................08
Choose the Right Data for the Job ............................................................11
Why Choose WhitePages Pro? .................................................................12
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01
Executive
Summary
Companies use consumer data for a wide variety of purposes, but not all
data is created equal.
Consumer credit data is highly regulated and can create financial and
operational overhead.
Unregulated data is as good or better for many business activities and does
not bring with it the risks and restrictions of regulated data.
Key scenarios where unregulated data is a better choice include:
Serving the “underbanked” population who lack detailed credit histories.
Verifying consumer identities to reduce errors and fraud.
Double-checking credit file data with a truly independent source of information.
Increasing business agility by enabling business units to execute without
time-consuming risk management procedures.
Verifying or screening out mobile numbers.
It is critical to select the right partner when using unregulated data because the value
of the data is strongly dependent on how the vendor sources, cleans, and enhances it.
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data on consumers is essential to a wide variety
of business processes, from fraud prevention to credit
decisions to marketing. Many data providers compete to
serve these needs, but not all data sets are created equal.
One of the most important distinctions to make when
evaluating consumer data is the degree to which it is
regulated by the two most important pieces of legislation
concerning consumer data and privacy: the Fair Credit
Reporting Act (FCRA) of 1970 and Gramm-Leach-Bliley
Act (GLB) of 1999.
While FCRA primarily applies to credit reporting agencies
and GLB primarily applies to financial institutions, both
create requirements around the use and protection of data
that have broader impacts on how companies operate. For
the purposes of this paper, we refer to data that is subject to
strong legal protections as “regulated data,” and data from
public sources as “unregulated data.”
Many businesses tend to use regulated files for everything—especially those operating in industries where
compliance is a major business concern, such as banking.
However, even highly regulated companies can use unregulated data for many business functions to reduce cost,
complexity, and risk. This can deliver greater return on
investment associated with a given activity. There are also
initiatives for which unregulated data is clearly the superior
choice, such as offering products for the “underbanked”
population and screening out mobile numbers from call
center operations. In this paper, we discuss the differences
between regulated and unregulated data and describe use
cases in which unregulated data is a better choice.
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03
How Data Regulations Apply to You:
A Brief History Lesson
Prior to the passage of FCRA, consumer credit data was compiled by a wide
variety of largely unregulated organizations that had little interest in protecting
privacy or safeguarding personal information. There were few regulations
around the types of data that could be collected, and no mechanisms in place
for consumers to review their credit files, correct errors, or know the reasons for
denial of credit.
FCRA was created to address these issues. It standardized the credit reporting
process and gave consumers the right to view and correct their data. Some key
relevant FCRA provisions include the following:
Creditors, insurers, and employers must notify consumers when
adverse action is taken based on any FCRA product and tell them
who provided the report.
Consumer reporting agencies must give consumers access to their
data when adverse action has been taken against the consumer and
provide an annual copy of the data free of charge.
Creditors must inform consumers that negative information will be
placed in their credit reports for late payments or judgments.
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Further restrictions were placed on non-public data by the passage of GLB in
1999. GLB primarily applies to financial institutions, a category which it defines
broadly to include real estate appraisers, collection agencies, tax return preparers, and other categories. Organizations subject to GLB are required to have
measures in place that safeguard protected data, including risk analysis of
departments that handle the data and consistent monitoring and testing of data
protection measures.
FCRA and GLB were instrumental in preventing abuses, increasing transparency,
and empowering consumers. FCRA in particular also represents the birth of the
modern consumer credit file, which is now a standardized offering across the
major credit bureaus. However, the restrictive nature of the regulations governing
non-public consumer data increase the risk, complexity, and cost of using it. For
example, one company paid out a $5.9 million settlement in a class action
lawsuit alleging that they failed to get employee consent before performing
background checks and did not provide proper adverse action notifications.1
1
School Transportation News, “Court Approves $5.9 Million Settlement In Fair Credit Reporting Act Settlement Against
FirstGroup.” Link: http://www.stnonline.com/home/latest-news/3208-court-approves-59-million-
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When (and When Not) to
Use Regulated Data
There are a few business activities in which regulated credit bureau data is the
best or only choice. These include granting or denying credit, making employment or hiring decisions, or insurance underwriting. In these cases, consumers
are required to be notified of adverse actions anyway, and the identity and credit
information available subject to FCRA can be critically important.
What Is Unregulated Data?
Data gathered from public and
proprietary sources
Not specifically regulated by FCRA
Can be used for a wide variety of
purposes without incurring risk and
regulatory overhead of credit files
Unfortunately, the consumer data industry has been built
on regulated files that rely on key fields—typically social
security number, date of birth, or driver’s license
number—to positively identify an individual. Because
of this, many companies use regulated data even
when they don’t need to because they believe this
information is necessary for positive identification.
This can create unnecessary financial and operational overhead. And in many cases, regulated data
does not even provide good coverage of a target
population, limiting its utility.
In fact, for many purposes, high-quality unregulated data
is equal or superior to regulated data. Unregulated data files
are typically constructed from three main sources: publicly
available information such as property tax records, information given
voluntarily by consumers through online searches or subscriptions, and other
proprietary sources such as warranty registrations or utility records. Because
these files are sourced independently from credit bureaus and do not contain
non-public personal information as defined by GLB, they offer unique advantages
over traditional credit files.
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Unique Advantages of Unregulated Data
01
First, they do not require extensive and costly risk management
processes. While protecting consumer information is always a
good idea, data containing social security numbers and birthdates is subject to much more stringent protections compared to
unregulated data, due to the increased risk associated with
exposure of PII (Personally Identifiable Information).
02
Additionally, because unregulated data is sourced independently
from credit bureaus, it often contains information that is simply
not available otherwise. For example, unregulated data can be
constructed to show relationships between individuals, whereas
PII used as a key field in a credit data file is designed to identify
only one individual at a time. Regulated data is often highly
dependent on traditional landline phone numbers, which are being
replaced by mobile phones at a fast pace. Unregulated data can
provide significantly better mobile coverage in comparison.
03
Finally, according to a 2011 survey conducted by the Federal
Deposit Insurance Corporation, “More than one in four households (28.3 percent) are either unbanked or underbanked,
conducting some or all of their financial transactions outside of
the mainstream banking system.” At the time of the survey, this
represented 34 million individuals. These individuals are likely to
have thin credit histories, making credit bureau files less useful
for identifying and doing business with them. Unlike regulated
files, unregulated data does not rely on credit reporting and can
help positively identify even those individuals who lack a social
security number or driver’s license.
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Four Ways Your Business Can
Benefit from Unregulated Data
Because of the differences previously mentioned, unregulated data can support a wide variety of
scenarios that are difficult or impossible to execute using traditional credit files. Here are four ways
that WhitePages PRO customers are using unregulated data to achieve key business goals.
NO. 1:
Serving the Underbanked Population
As the financial industry has become more restricted and competitive, the “underbanked” market
has received new attention, resulting in a plethora of products such as secured credit cards,
prepaid debit cards, small-dollar loans, and so on. Dan Schulman, group president of Enterprise
Growth at American Express, estimates that “there are more than 2 billion people in the world, and
70 million in the US, that are poorly served by the traditional financial system,” and American
Express and other financial institutions are working to change that.2
As with all financial products and services, the provider must manage risk effectively to be profitable and offer consumers reasonable pricing. With traditional products such as mortgages and
credit cards, providers rely on credit scores and regulated data from credit bureaus to manage risk.
For the underbanked, credit information is lacking or nonexistent, making it a waste of time and
resources to use regulated data.
Also, in many cases products for the underbanked are designed for those with slim credit histories,
making credit history less relevant and reducing the need to take on the risk of using regulated
data. Unregulated data allows financial institutions to instantly verify the identities of applicants—even those who lack traditional forms of identifying information—to protect against fraud
and reduce errors without triggering the restrictive privacy, security, and reporting requirements of
FCRA and GLB.
2
Banking Technology, “American Express aims to serve unbanked and underbanked,”
http://www.bankingtech.com/174582/american-express-aims-to-serve-unbanked-and-underbanked/
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NO. 2:
Improving Brand Perception
Because of FCRA, when a company makes an inquiry about a person’s credit file,
its name is recorded in that person’s credit file across all the major credit bureaus.
If the inquiry was being used to approve or deny credit, it is listed as a “hard”
inquiry and the consumer must give prior consent. Consumers typically expect to
see these hard inquiries when they apply for credit or have a background check
performed on them.
However, there are many reasons that a company might want to get information
about a consumer that would generate a “soft” inquiry record in the individual’s
credit report. The company might be trying to find an address to send a collections letter, or they might be trying to verify someone’s identity before they begin
the process of making a credit decision.
For some companies, showing up in consumers’ credit reports on a regular basis
could be detrimental to their brand image. Debt collectors in particular can be
subject to harassment lawsuits depending on state and federal laws. Unregulated
data can enable organizations to perform many of the same functions for which
they use regulated data but without showing up in consumers’ credit reports. Of
course, if unregulated data is used to grant or deny credit or for other purposes
covered by FCRA, the standard notification protocols would apply. But in many
other cases, unregulated data is a valuable resource for companies to find
consumer information without negatively impacting their brand.
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NO. 3:
Increasing Business Agility
Many companies are so used to working with regulated data from credit bureaus that they treat all
consumer data with the same heavy-handed approach to risk management, privacy, and security.
Unfortunately, this adds layers of complexity that can stall or stop important business initiatives. A
credit card department granting or denying credit needs to use regulated data. A marketing department wanting to identify additional members of a household does not.
By having policies and procedures in place for enabling business groups to use unregulated data
where possible, companies avoid the financial and operational overhead associated with non-public
information and can move more quickly to take advantage of market opportunities. Unregulated
data can also be used for identity verification at the beginning of a credit application process to
eliminate costs associated with contact data that is incorrectly entered or scanned data, in a
non-standard format, or just plain fraudulent.
NO. 4:
Broadening Data Coverage
Many larger organizations already use FCRA-regulated data. In some cases they may want to verify
the accuracy of one file by comparing it to another. However, since most credit files draw data from
the same sources, using one credit header file to verify another may fail to catch many errors since
they are typically drawn from the same source: consumer credit header files. In other words, they
will tend to contain the same errors.
Utilizing an unregulated data file as a truly independent source of identity data achieves the
business objective of a true second check, and can provide additional data and insights such as
greater coverage of mobile and non-fixed phone numbers such as those associated with Voice over
Internet Protocol (VoIP).
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Choose the Right Data for the Job
Regulated data is the right tool for a limited number of circumstances such as granting or
denying credit, performing formal background checks, some debt collection procedures,
and insurance underwriting. For virtually any other business process, organizations
should consider unregulated data first. It enables them to move faster, reduce privacy and
security risks, and eliminate regulatory cost and complexity.
However, it is critical to choose the right data partner. The credit bureaus and data
products based on their files are regulated and controlled by FCRA and draw their data
from traditional credit sources. While the data may not be as rich or complete as many
unregulated data products, at least it is sure to be in a consistent format across providers.
With unregulated data, information can be drawn from many different sources that vary
greatly in format.
The vendor is responsible for cleaning, standardizing, correlating, and analyzing the data
to make it usable. Vendors may also have proprietary sources of data that enrich their
offerings. Additionally, unregulated data by definition does not contain key fields such as
social security numbers that are unique personal identifiers, meaning vendors must use
other data fields and linking technology to ensure positive identification.
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Why Choose WhitePages PRO?
WhitePages PRO is the leading provider of high-quality unregulated data and associated
services in the U.S. and Canada. With a data organization approach we call the Contact
Graph, names, phone numbers, and addresses are linked to form an intricate web of
information. This unique structure allows us to update our data at unprecedented speeds,
and ensures accuracy by double- or triple-verifying each data point.
Our offerings combine data from public records, unique insights from tens of millions of
interactions with our consumer products every month, and other proprietary sources into
one of the most complete sources of consumer information available. With the best mobile
coverage of any data vendor in North America, and numerous ways to access and use our
data at enterprise scale, we have become a key data provider partner in the financial
services and e-commerce industries, among others. To learn more about how unregulated
data can benefit your business, contact us at 1-877-767-8052.
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Put WhitePages PRO to
work for your business.
Contact us to learn more.
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