Dive into the heart of digital innovation and consumer protection with this compelling episode of DrivingSales Insights, featuring the insightful Angelica Jeffreys from Equifax. As we navigate through the challenges and opportunities presented by online retailing, Angelica brings to light the critical issue of rising consumer fraud. She discusses the subtleties of in-person versus synthetic fraud, offering a clear view into the tactics used by modern criminals and the sophisticated strategies businesses can employ to counteract them.

But it’s not just about defense. This episode goes further, exploring how AI and Big Data are revolutionizing the way we engage with customers, offering personalized experiences that were once thought impossible. Angelica provides fascinating insights into Equifax's role in enriching dealer data, ensuring cleaner, more effective customer databases for a sharper marketing edge and improved sales tactics.

The current state of consumer fraud.

Yeah, you know, it's very interesting. One of my coworkers was a victim of fraud just this weekend, where a consumer stole her identity and walked into a dealership in the Atlanta area to buy a car. Everything was very suspect because it was a buy here, pay here dealer and my coworker has an exceptional super prime credit score. So the dealer got a little suspicious and called her and they arrested the woman on the spot. 

But in-person fraud is nothing new. That has been going on, somebody stealing a consumer's identity to go try to acquire, whether it's a car or an iPad or however, they're attempting to commit fraud. Where we're seeing increases in an incremental way that we haven't seen in the past is in the online shopping world. Of course, there are so many new platforms and capabilities to be able to transact online and the thieves are getting much, much more sophisticated. 

There are a lot of crime rings out there that are targeting the ability to transact online, in particular, with synthetic fraud. Synthetic is a very patient fraud. It takes some time to really build up the persona, which is pieces of different identity elements from different real people and deceased people, wherever it is they gather it together. It's very hard to detect. Although the three bureaus, Equifax, Experian, and TU, we all have solutions that can help prevent and identify when that's happening. In the next ten years, we anticipate fraud in automotive to be a $10 billion problem. And so we have a lot of our partners coming to us asking for whether it's first party, third party, synthetic, comprehensive solutions to try to waterfall into creating solutions that can address all of those types of fraud.

How do we protect ourselves and make online retailing easy for consumers?

We're all consumers, and I think we expect and almost appreciate a certain level of friction at a certain point. If you're just logging in and shopping for a car, you're not you're not expecting to be asked for certain forms of identity.

But as you're moving through the process and you're getting a little more serious and you want to get pre-qualified, for example, as part of that shopping process, you expect you're probably going to have to give some PII or the last four of a social or have your device at minimum authenticated. There are some pretty frictionless ways to do that.

And then again, as you're proceeding through that transaction and now you're saying, hey, I really do want to purchase this car, I think you're expecting a little bit more. You're going to have to provide your driver's license and expect that you're going to scan it with your phone. And there's probably going to be some level of detection to make sure that what you've provided is not a picture of a picture of when taking a picture or your cell phone that you need to upload.

So the trick there is and what our partners are looking to us to help them solve is to help us with the right solution at the right point in time, so as the consumer progresses, the expected friction that makes them feel secure and makes them feel like it's a trusted experience. It's not too soon and it's not too burdensome on them, too soon in the process.

AI and Big Data

AI is something that I think if we look at the glass half full, there's so much opportunity.

I'll give you an example of how we can help enable AI. In a lot of our non-regulated data, which is modeled data against what we call our IXI database, we acquired a business 15 years ago that essentially is a consortium of the nation's investable assets, we manage that database is about 50% of the of the investment accounts in the country.

Because of that, we know better in an aggregated way what's in people's wallets. We can understand what kind of discretionary spending you have. We know what your ability is to pay in an anonymized and aggregated way. And so when you take that data and you apply it to the many ways that you can use AI to create a custom and personalized experience for a consumer, you're layering in insights that can help inform. When you know this type of consumer comes into a funnel, AI's going to know, okay, well, they're an economic cohort 72, and they're likely to want to engage in conversation about the, the economic, the like the gas mileage, things that that our data will tell them about the consumer in addition to what they can afford. It's a much richer experience for the consumers to have the data in that API process if you will. So a lot of the conversational AI either Stella of course, who's out there, and some of these other businesses that are doing a wonderful job in using it to improve the consumer experience could make that process a lot more personalized by using data like we have with IXI. And that type of application is what we're exploring.

What is the current state of CDPs?

I think there are a couple of topics in that question because big data means a lot of things. And you're right, it's a very exciting time right now with the way that companies are able to activate the data. But I think you have to start with clean data. And dirty data is a problem right now. There are some of the capabilities of some of the DMS providers and the CRM providers that are going to need to advance so that the data that is being pushed into these CDPs has been corrected, normalized, keyed, and linked so that it is at the right level of cleanliness and accuracy to be acted upon. There are a lot of partnerships and providers that really need to come together to help create that foundation of clean data. And so dealers really need to try to figure out, okay, who am I going to partner with to help with that?

And so finding a partner who is familiar with how to correct and normalize and key and link the data is going to be key. The second piece to that on the activation side is I think the industry really has to come together to determine, okay, what role does the CDP play, what role does the agency play and what role do the data providers play? There's probably more that I can throw into that conversation, but really in trying to activate in the most efficient way. 

Agencies play a big role in this too, And most agencies that you have out there today are much more accustomed to a traditional advertising model. They have to kind of morph a little bit to become consultants if they're really going to support their dealer body or their OEM customers. You've got OEMs in this conversation, too. So the agency is really taking on a more consultative role to make sure that the campaigns that are being pushed out by some of these CDPs fall in line with the strategy and also are efficient in the overall deployment of the agency strategy on behalf of the OEM, of the dealer, and the data providers also to help enhance the data.

There's this conversation about first-party data and how to activate that data. And the thing to remember, even once you've cleansed the data and keyed and linked it in this piece, most dealers have a fraction of the PII or the data about the consumer. I'm going to give you my name and address. But what else do you know about me that can be used for marketing? So insightful third-party data that can be pulled into these clips can help enhance these consumer records and fill in the gaps. I mean, people move, people change their phone numbers, people have multiple email addresses, and so bringing in a source of truth that can help fill in all those gaps and then layering in third-party data that provides insights about that consumer that can help with personalization, which is what consumers expect today.

To wrap that all up, this is really to your point, your question. We're now finally at the precipice, which is what has always been the promise of digital. We've dreamed of this moment and here it is. It's really an exciting time to see this come to fruition.

How does Equifax use dealer data?

That's a great question. So Equifax does not ingest data. What we do is we work through our vendors and our third-party providers to append to the dealer's data. For example, we will get or we will give a file of the entire universe to a CDP provider who can then ingest it and use it to append to a dealer's first-party data. We do have data cleansing, banking, and linking capabilities that we will take the file in then normalize it and send it back from that perspective. We don't house any of that data. We don't keep any of that data. It is simply a file transfer keying and linking, then a cleansing process, and then it comes back.

And, of course, we're a credit bureau. We house PII on hundreds of millions of consumers and it is of the utmost importance to us to protect consumer data no matter what. It would be against every DNA cell in our makeup to do anything other than whatever we're tasked to do with that data.

What will the role of CRM be? 

Yeah, I think they play a key role in being a source of data for the CDP, and some of the CRM companies, as I understand it, are looking to become CDPs themselves or create a mechanism where they're consistently purging the data back and forth so that as the data goes out to be cleansed and linked and append a unique key is assigned to it, and it comes back in as a sort of refreshed version of that data.

They're either going to be output only or they're going to create a mechanism to have the input, cleansed, keyed, and linked household data corrected within their system. Many of them have already started down that path. Some of them have not. I think if they're going to stay relevant, they're going to have to create a mechanism to have that bi-directional correction and data coming back so that it is normalized, keyed linked, and standardized with the most recent information about that consumer.

Pent-up consumer demand

For the market analysis piece, we rely pretty much on our partners in the marketplace. We work with Cox Automotive, we work with J.D. Power for those types of trends. As I understand it, there is a good pool of consumers waiting, and I think the last number I saw was 1.8 million, of what they're calling pent-up demand. Those consumers are sitting on the sidelines waiting for pricing to come down, and interest rates to come down. And so the people that are in the market are people who aren't that price sensitive and or paying cash and or leasing. But there is a subsection of the market that is just kind of sitting on the sidelines waiting for market dynamics to shift.

You are seeing in certain pockets in the subprime consumer that really, really needs a car and very much struggling with affordability. You're starting to see strain within lender portfolios of those payments going delinquent and derogatory. But as I mentioned, we have credit trends and there's another person on my staff who really speaks to that part of how loans are performing and what that might predict for near-term and longer-term sales in the marketplace.

There is a good amount of pent-up demand, and it remains to be seen when that pendulum shifts and that group of people comes back out to the marketplace to buy.

Where will this be in three years?

So I believe that we are entering an era of efficiency and personalization for our consumers that if we embrace it we've only ever dreamed about in the past. To me, it's very, very exciting. I mean, we all know the biggest complaint from consumers is how one system doesn't talk to the other and how I started something online and I ended up in the showroom. It was completely different and it took me 3 hours, you know, to transact. That's all going to be gone in three years. I'm confident of that. It won't be a year. It won't be two years. I'm pretty comfortable saying that in three years we should be at a place where the ability to transact online and the ability to pick up that car in a showroom will be integrated in a way that makes it a much better experience for consumers. I'm very excited about that.

Targeted marketing is going to change

I think you're 100% right about that. The ability to understand exactly what the consumer has in their garage, what they can swing, when is the right time, what's important to them, and how quickly they can get from step A to step Z is really going to change significantly and to your point, AI is going to be a big part of that.