One of my co-workers has been complaining a lot recently that Bell, the internet/TV provider, has been intentionally messing up her bill for 3 months in a row. Everyone I know has at least one story like this, of being really screwed by some phone or TV company. It’s not that she’s being targeted, it’s that companies like this know they can wear consumers down if they make enough “errors.” Eventually, we don’t have time to fight, and if we don’t pay up, our credit rating suffers. So we give in. The company doesn’t even have to try to screw us individually – they can just build an imperfect system that tends to make errors in their favor.
Well, I have a permanent solution to this problem. The only leverage these companies have over us is our credit rating. But many people who have these problems have perfectly fine credit – like me, or my co-worker. If we chose not to pay our bills it wouldn’t reflect a risk of defaulting on a mortgage, our car payments, or a credit card. It would just reflect the fact that the phone company is awful and gave usa faulty bill.
Credit scores are generated by companies that have developed algorithms to predict the chances that someone will default on a payment. There is competition among consumer credit rating agencies to have the best prediction. Banks and used car salesmen need to know this risk so they can offer appropriate credit. So anyone who comes up with a better prediction algorithm could corner the market for credit scores.
Enter my idea: Non-payment of a cell phone bill of $500 – even though your normal bill is $45 and you regularly pay every other bill – is NOT a sign of any risk that you will default on anything else. It is a sign that the phone company screwed you. So, a more accurate credit score would not penalize people for not paying such bills. A credit score that took this into account could outperform other credit scores and become the industry standard. And at that point, the evil media companies would have no leverage to force us to pay, except to go to court. Going to court is expensive and difficult, and they would usually be at risk of losing. So they would be forced to stop screwing us if they want to be paid!
Note that consumers who refused to pay all their bills would still have worse credit scores. It’s just specific non-payment of one bill that would contribute nothing (or next-to-nothing) to the score. Obviously, a good algorithm would have a sliding scale (a continuous measure) for credit score decrement based on how aberrant the bill was, how often you didn’t pay (relative to other people), and so forth. So the system couldn’t really be abused by consumers in the other direction either. The effect would just be to shift the balance of power in a dispute to midway between the consumer and the company. The company can refuse service, the consumer can refuse payment, but there’s no strong external force limiting the consumer.
Unfortunately, this idea takes an entrepreneur to implement, someone to develop the new credit score and start up a company to sell it (or integrate it into existing companies’ algorithms). While I’m confident I could improve on the existing algorithms, I have other statistical questions that occupy my time, and I’m no businessman. So someone else will have to do this…