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How Credit Bureaus Use Surveillance to Make Money

How Credit Bureaus Use Surveillance to Make Money

The Business of Surveillance: How Credit Bureaus Profit from Monitoring

In the modern world, our creditworthiness follows us everywhere. It’s not just tied to our credit card and loan history anymore. Now, everything we do is being constantly monitored and evaluated to determine our credit scores. A new credit surveillance industry has created a network of consumer data brokers who are collecting, analyzing, and selling our personal information and financial data. It’s nearly impossible for Americans to opt out of these information silos, which has raised several concerns about how some of these non-permissible activities might violate consumers’ rights under the Fair Credit Reporting Act (FCRA). Let’s look at how credit bureaus use surveillance to make money.

The criteria that debt collectors and purchasers utilize to evaluate our credit are often hidden, random, and unjustified. We may not even realize we’re being penalized – or that our credit score is being lowered – for seemingly innocuous things like paying for gas with a credit card instead of a debit card.

Credit monitoring by unknown parties

Harmful Data Collection and Usage

The FCRA protects consumers from harmful data collection and usage practices. But, the law is outdated and doesn’t address modern credit surveillance tactics. As a result, abuse in the marketplace occurs without any real consequences and sometimes without detection. Consumers are, however, becoming more conscious of the potential negative effects of credit monitoring and how it may influence creditors.

That’s just about where the Consumer Financial Protection Bureau (CFPB) draws the line. CFPB Director Rohit Chopra said in a recent press release that:
“Americans are now subject to round-the-clock surveillance by large commercial firms seeking to monetize their personal data.”

Key Issues: Transparency, Control, and Discrimination in Consumer Data Practices

The CFPB has authority over companies that collect and sell consumer data, including credit bureaus and furnishers of information. The agency is messaging that it will use this authority to protect consumers from the harmful practices of the credit surveillance industry.

There appears to be three main flaws with how consumer data is gathered and used according to regulators:

1. Lack of Transparency

2. Lack of Control

3. Potential Discriminatory Practices

Credit Agencies: Assessing Risk or Denying Opportunity?

Credit agencies that provide credit-related services argue that they help lenders in better assessing customers and reducing fraud. In reality, the personal and behavioral information that is purchased and sold is frequently used to deny consumers access to credit, housing, and job opportunities. Some information that is collected and sold is often inaccurate or outdated.

Andy Spears Consumer Advocate
Andy Spears – Consumer Advocate

Consumer advocate Andy Spears, who writes about consumer finance issues, notes,

“Credit bureaus are notoriously slow at correcting inaccurate information. This means customers can be denied a mortgage or a place to rent based on information a credit reporting agency knows is wrong. These agencies are more focused on monetizing personal information than they are mitigating financial risk.”

To keep their data fresh, companies are constantly appending consumer records with “predictive” data that is generated by computer “black box” models. This often includes things like a consumer’s likelihood of getting divorced, their health status, and even how likely they are to engage in risky behavior. Predictive data is often used to target ads and marketing materials, but it can also be used to make credit decisions.

This is harmful to consumers in several ways. First, it disproportionately impacts low-income consumers and minorities who are more likely to be ‘credit invisible’ or ‘unscorable.’ This means they don’t have enough information in their credit file to generate a score, so they’re automatically treated as high-risk. Second, even if you do have a good credit score, you may still be denied credit if you don’t meet other criteria used to judge your ‘creditworthiness.’ For example, you may be judged as being too young or too old, having too much debt, or living in an ‘undesirable’ neighborhood. Third, data breaches are becoming more common, and our personal information is at risk of being leaked or sold without our consent.

How credit bureaus track

The Intricacies of Unseen Credit Tracking Networks: A Deeper Dive

In a revealing article titled “Your Life, Logged, and Scored Like Credit,” consulted with experts at the National Consumer Law Center (NCLC) to peel back the curtain on the complex and often opaque universe of credit reporting. The discussion uncovered an intricate web of credit agencies that are relentlessly monitoring your every action.

What is even more alarming is the proliferation of lesser-known companies—entities that most consumers have never even heard of—that are gaining access to deeply personal information.

For the average consumer, this raises crucial concerns, as the tracking isn’t limited to financial behavior. These agencies are compiling data on myriad aspects of your life, creating a comprehensive profile that intertwines your lifestyle, purchasing habits, and even social interactions with your creditworthiness. This interconnected data could be making its way to various decision-making entities, from lenders and employers to landlords. Given that some of this information can often be inaccurate or outdated, the ramifications could be dire, affecting your ability to access credit, secure housing, or even land a job.

NCLC Highlights Major Players:

According to the NCLC, these are some examples:

Acxiom is a consumer data broker that has profiles on nearly every American adult. It sells this information to marketers, banks, and other businesses.

Experian is a credit reporting agency that maintains consumer credit files. It also sells marketing lists and other services based on consumer credit information.

ChexSystems is another credit reporting agency that provides information on consumers who have misused checking and savings accounts. This information is used by banks to screen new applicants.

Equifax is a credit reporting agency that keeps consumer credit files. It also owns several specialty consumer reporting agencies, such as Clarity Services, Inc. and Work Number.

The NCLC has also expressed concern about how these companies collect, use, and share non-financial consumer information as well. Ariel Nelson, a staff attorney at the National Consumer Law Center (NCLC) who specializes in consumer reports told, “These companies are becoming the gatekeepers to essential things in our lives.”

It’s uncertain how many CRA firms operate in the credit surveillance industry. We do know that they exist and are building profiles on us all, however. We also understand that this information is frequently utilized to make credit, employment, and housing decisions – decisions that can have a significant influence on customers’ lives.

What’s Next For Consumer Credit Reporting?

If you find errors on your credit report, you have the right to dispute them. You can also freeze your credit report to prevent new information from being added. If you’ve been harmed by illegal credit monitoring, there is help available. You should file a complaint with the Consumer Financial Protection Bureau and the Federal Trade Commission.

You may be able to take legal action against a business if you have suffered damages as a result of their illegal or unethical practices. An experienced attorney can help you determine if you have a case and what your legal options are. This article is for informational purposes and is not intended as legal advice. If you need legal help, please consult a lawyer.


Led by attorneys Michael D. Finn and J. Andrew Meyer, the consumer protection and class action firm Finn Law Group represents individuals nationwide who have been harmed by illegal or unethical business practices. If you have any questions about this topic or would like to speak with a Finn Law Group attorney, please call us at 855-FINN-LAW. Follow us on Twitter

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