Consumer protections: Congress should consider strengthening protections around scores used to rank consumers

What the GAO found

Consumer scores are indicators that group consumers based on their past actions and characteristics. Score creators use public records and non-public information such as purchase histories to create scores. Companies and other entities use these scores to segment or rank individuals to predict how they will behave in the future. For example, companies use certain scores to target advertising to consumers most likely to purchase a particular product or service. Consumers can benefit from these scores by receiving discounts or targeted offers that they might not have received otherwise. Consumer scores have a variety of uses, although the full range of uses is unknown. The GAO has identified a number of score uses, including those in the figure below.

Selected Uses of Consumer Scores

The risks that consumer scores can pose include potential bias and adverse effects, and the scores generally lack transparency. Data used to create scores may contain racial bias – for example, one study found that black patients were assigned lower risk scores than white patients with the same health care needs, predicting less need of a care management program. The use of consumer scores may also have potential negative consequences for some consumers, who may be charged higher prices or targeted for less attractive financial products. Additionally, consumers are generally unaware of how they are rated, which prevents them from knowing how their personal information is being used and reacting to negative consequences.

No federal law expressly governs the creation, sale, and use of all consumer scores. Federal consumer protection laws can help ensure that consumer scores are based on accurate information and used fairly and transparently, but these laws only apply in certain circumstances. For example, whether a law applies to a particular score may depend on the information used to create the score, the source of the score, or the purpose for which the score is used. Without congressional consideration of whether consumer scores should be subject to additional protections, consumers may continue to be at risk of being harmed by the use of these scores and may have options for redress. limited.

Why GAO Did This Study

The growing use of consumer scores to make decisions affecting consumers has raised questions among some members of Congress and others about their use and potential risks. Scores are generated from various consumer information, which may include public data. Some may derive from complex methodologies using technologies such as artificial intelligence.

The GAO has been asked to examine how predictive consumer scores are used and regulated. This report examines (1) how these scores are used, (2) potential risks to consumers, and (3) federal consumer protections for the scores. The review focuses on certain types of scores, some of which may not be covered by the Fair Credit Reporting Act. GAO analyzed publicly available information on websites from a non-generalizable sample of 49 consumer scores, selected based on literature reviews and interviews with stakeholders; reviewed studies by academics and consumer rights advocates; interviewed sheet music creators, industry organizations, consumer advocates and federal officials; and reviewed applicable laws and regulations.

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