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Scoring agencies on the rise: Evaluating consumers’ business potential

Consumer scoring is becoming more prevalent as companies hire agencies to harvest and analyze online data and behavior.

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Quantumrun Foresight
August 16, 2022

Insight summary

Consumer scoring agencies are gaining traction, using vast online data to assign scores that influence how businesses interact with individuals. These scores, derived from credit history, social media, and purchase patterns, affect everything from advertising to job prospects, with concerns over privacy and fairness. With no clear regulations, these practices are becoming more widespread, leading to calls for greater transparency and potential legal changes.

Scoring agencies on the rise context

Almost everything people do online leaves a data trail. Companies are constantly collecting information about users, from visited websites to purchased items and places tagged on social media. And as more and more businesses adopt customer scoring models, it’s becoming increasingly difficult to keep track of all the different scores being assigned by scoring agencies.

Consumer scoring agencies are often third-party providers that collect and analyze consumer data to assign a score to each individual. Companies can then use this score to determine whether or not to conduct business with specific people. There are several scoring models, but the most common ones rely on credit scores, social media activity, and online purchasing history. And while consumers might not be familiar with all of them, there’s a good chance they’ve been scored by at least one. Some companies argue that they explicitly write these data collection policies down on their app privacy policies, but most users don’t bother to read these data privacy disclaimers.

As a result, consumer scores can be influenced by just about any app data, from Airbnb communication to delivery orders. While most of these scores probably won’t lead to someone being denied loans, this personal information can be used for targeted ad campaigns and giving VIP treatments to high scorers. The Wall Street Journal released an investigative piece in 2018, claiming that secret consumer scores can spell the difference between waiting for customer service representatives for 45 minutes and waiting for one minute. The media site also said that consumer scores could probably land some people airline service upgrades. In addition, it’s tough for people to get their consumer scores, let alone ask companies to delete them.

Disruptive impact

Consumer scoring agencies are seeing their influence grow as more businesses and brands adopt their data to determine customers’ risk potential. Consumer scoring agencies differ from credit scoring agencies, although some of their information overlaps. Credit reporting is often regulated, with many governments requiring these agencies to hand over the information they acquired to the rated individuals if requested. Consumer scoring agencies, in contrast, lack transparency and (as of 2023) are not bound by the law to give information to users.

Consumer scoring has some obvious benefits to businesses, but the downsides for consumers can be pretty severe. The biggest concern is that these scores can be used to discriminate against certain demographic groups and perpetuate a cycle of poverty. For example, a low credit score can exclude people from loans, health insurance, and specific job profiles. A low social media score may impede someone’s ability to secure a cell phone contract.

In 2022, the US Government Accountability Office (GAO) urged Congress to create a law that protects people against consumer scoring or ranking. As of 2023, no US regulations oversee the creation, sales, and use of consumer scores. As a result, consumer scoring will become more common during the 2020s as brands take advantage of big data and predictive analytics.

Implications of scoring agencies on the rise

Wider implications of the growing influence of scoring agencies may include:

Scoring agencies increasingly using secret systems to segment customers by their online behavior and interactions with chatbots, leading to more personalized but potentially intrusive marketing strategies.

Certain customer groups receiving preferential treatment, such as premium services and exclusive offers, based on their purchasing patterns and frequented websites, creating a tiered consumer experience.

Human resources departments incorporating consumer scores in pre-employment screenings, facing criticism from civil liberties organizations concerned about privacy and discrimination.

Regulatory bodies facing growing pressure to establish clear guidelines on the acquisition, exchange, and analysis of consumer scores, aiming to protect individual rights and data integrity.

Consumers increasingly demanding clarity and control from brands regarding data collection and use, insisting on the right to have their personal information erased upon request.

Enhanced customization of products and services as companies leverage detailed consumer profiles, leading to higher customer satisfaction and loyalty.

A shift in credit accessibility and terms offered to individuals, as scoring agencies provide more detailed consumer profiles, reducing financial risks for lenders.

New job opportunities emerging in data analysis and consumer privacy protection, as companies seek expertise in managing and securing extensive consumer data.

Political campaigns and organizations potentially utilizing consumer scores to tailor messages and outreach, leading to more targeted and effective voter engagement strategies.

Increased public debate and ethical considerations around the fairness and impact of consumer scoring on various demographic groups, influencing social policies and public opinion.