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How Customer Data and Credit is Used by Credit Card and Finance Companies

Over the last few years, the financial services sector has undergone significant change. Consumer desires, demands, and behaviors have altered how finance companies and credit card companies cater to shoppers. With nearly universal use of credit cards, mobile wallets and myriad financing options, it’s increasingly common for financial services companies to share consumer data. This article examines how customer data is used by credit card and finance companies, how consumers could take approved credit to competing merchants, and how businesses can take steps to ensure their shopper’s data is protected – and used at their business – not others.

Privacy Problems in Electronic Payment Systems

Data privacy and transparency are hot topics within financing services. As more shoppers use digital payment methods, privacy and security issues come to the forefront of the conversation.

Despite the advantages of credit cards and financing options, they harbor a host of data issues:

  • Hacking and cyber attacks
  • Phishing scams
  • Data breaches
  • Tracking of consumer behavior
  • Unauthorized access to financial information

Consumers must know the risks associated with credit card companies and some financing companies. And businesses offering consumer financing options must partner with companies that respect and protect consumer data.

How Credit Card and Financing Companies Use Consumer Data

Once a business signs up with a private-label credit card or financing company, those companies have access to sensitive consumer data. Many companies use that data for their own purposes, for marketing and sell it to other companies, regardless of how it might affect the consumers. Below we explore how some credit card and financing companies use – or do not use consumer data.

Consumers Can Apply for Financing – And Use Those Fund Elsewhere

When a patient applies for a medical credit card, for example, CareCredit, Wells Fargo Health Advantage, or AccessOne MedCard, the patient can take that approved dollar amount, for perhaps elective medical surgery or medical equipment, and go to a different surgeon or supplier for their purchase.

If a consumer opens a revolving credit card with a retailer, for example, TJ Maxx (they offer points to the consumer for TJ Maxx purchases) the TJ Maxx Mastercard can be used at other locations, meaning TJ Maxx loses that business.

Not so when you partner with United Consumer Financial Services. Consumers can only use the approved dollar amount – usually for the full purchase amount – with the business who submitted the credit application on the consumer’s behalf. Dedicated financing helps you keep YOUR customers, at YOUR business, increasing YOUR revenue.

Retailers Monitor Purchase History

Every time you pay with a credit card, the retailer can add bought items to your purchase history. When using digital methods to shop, your data is used by the retailer and by the bank that issues the white-label credit card.

These companies have access to vast personal data: how much is spent on restaurants, nonprofit donations, travel and more. And when combined with other data, that information – which should be private – can be used to target consumers in an intrusive and unwanted manner.

Once retailers have consumer data, they can sell or share it with other companies.

Companies Sell Consumer Data

Under the 1999 Gramm-Leach Bliley Act, financial institutions must disclose their information-sharing practices to their customers and “protect” sensitive data. And while this act seems like the ideal way to combat data privacy issues, companies can still legally sell consumer data to others.

Credit card information including the data, amount, recipient of charges, and consumers’ personal data can be sold.

Unless consumers proactively opt out of data sharing for every financial service provider who has their data, their privacy is invaded. And unfortunately, opting out of sharing is a hassle. Plus, opting out from certain companies doesn’t necessarily prevent those same companies from sharing information with their affiliates or partners.

When credit card companies choose to share consumer information, it can feel like an impossible obstacle for the consumer to overcome.

Consumers Can Access How Their Information is Shared

On top of unwanted data tracking and sharing, transparency is a common concern for consumers. Privacy policy agreements are required by law across the world if a business collects data that can be used to identify an individual.

For UCFS, our company Privacy Notice explicitly states where data is or is not shared. For example, a consumer’s social security number is collected when a credit application is submitted, and that is shared with credit bureaus for the purpose of extending credit. Consumer emails and phone numbers are collected for the purpose of collecting repayment for the life of the consumer’s loan, and that information is not shared with anyone, except the business who submitted the credit application.

When a shopper makes a purchase, they can Google their provider to view their privacy policy, can contact a company to gain even more insight to how their data is shared, and can even submit a request to have their data not shared.

UCFS Protects Consumer Data from Day One

United Consumer Financial Services differentiates itself from other financial institutions in the way we manage customer data. UCFS does not sell consumer data or market to consumers who have a loan through us. We use consumer information solely to process loans and collect repayments.

We maintain a high standard of privacy and transparency with our consumer clients. This translates to peace of mind for consumers knowing that personal data and information is secure.

For businesses seeking financing options for their customers, UCFS’ dedicated consumer financing ensures clients are approved for financing through your business only.

Protect Data and Your Bottom Line with UCFS

When a business partners with UCFS to provide consumer financing, you can trust that your business information as well as your consumers’ data is secure. Not only do you deliver a superior financing solution for clients seeking low monthly payments, but you provide an product that keeps their personal information safe.

UCFS has delivered secure, effective financing solutions to businesses and their clients for over 40 years. Reach out today to learn how UCFS can help you serve more shoppers and keep consumer data secure.