How A Credit Card Company Can Predict Your Divorce

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How A Credit Card Company Can Predict Your Divorce
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Remember when Visa promised it was "everywhere you want to be"? The credit card giant may be heading everywhere you don't want it to be — like your love life, your marriage, and even (if it's come to this) your divorce because they have access to your spending and payment habits.

Marissa Mayer used to be a Google analyst and said, "There are actually a lot of places that have a lot of data about you that people don't know. I read the other week that credit card companies know with 98 percent accuracy two years before that you're going to get divorced. That's crazy."

Visa (and, potentially, its competitors) are able to predict whether you and your significant other are likely to call it quits based on your buying and credit history.

Missed payments are a red flag that something may be, excuse the pun, amiss.

Why should they care, you wonder? Because they want to know how to get you to keep buying stuff, even if your life takes a sudden U-turn.

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"Credit card companies don't really care about divorce in and of itself," Yale University law professor Ian Ayres, the author of Super Crunchers, said. "They care whether you're going to pay your card off."

In his 2008 book, Ayres writes about what he dubs the rise of the "number-crunching revolution" orchestrated by a growing pool of statistical wizards he calls "Super Crunchers."

Among the many examples he uses, Visa tracks its customers' marital statuses. 

"Business and government professionals are relying more and more on government databases to guide their decisions," he writes. "Decision-makers in and outside of business are using statistical analysis in ways you'd never imagine to drive all kinds of choices."

But that doesn't mean credit firms are willing to "fess up to the practice of mining for data to learn about cardholders" relationship woes and other details about their personal lives. This strategy is under the radar, to put it mildly. Way under.

"Visa does not track or monitor cardholder marital status, nor does it offer any service or product that predicts a potential divorce," the company said in a statement. "These claims are false and any media outlets or authors citing that Visa has such capabilities are inaccurate and wrong."

It's already widely known that companies — especially those with a heavy reliance on risk analysis — go to great lengths to track people's online spending and lifestyle behaviors in order to custom-market to them.

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"Predictive modeling," is a tactic sometimes used by credit card companies to find out more information on their users. For instance, they can find out whether a customer has moved recently. This, in turn, could help their real estate partners as they attempt to generate new business for themselves.

"There's a whole market out there that has tried to predict whether someone has just moved, and to be first with offers," Bob Grossman, the director of the Laboratory for Advanced Computing at the University of Illinois in Chicago, said. "Those kinds of things tend to be pretty high value."

It isn't just credit firms that dig for personal dirt on clients, however. The matchmaking site eHarmony does it. Google does it. The federal government, Walmart, Harrah's Hotels and Casinos, and others do it. Honestly, the list is long. Some might say infinitely so.

Sure, it could be a good thing that your credit card company and other businesses you patronize are getting to know you better these days. There's something comforting about sales pitches being tailored just for you, isn't there?

But the trend has also sparked controversy about the invasion of privacy and consumer rights.

Mayer also said, "I would love to see buying habits included in profiles. The information doesn't have to be public, but credit card companies know an awful lot about us, why not put the data to good use?"

Ultimately, it just means that you have to be an even savvier customer — whether your marriage is in trouble or not.

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Editor's Note: This article was originally posted in June 2011 and was updated with the latest information.

This article was originally published at MyDaily.com. Reprinted with permission from the author.

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