Adventures in Algorithms: My Word Against the ATM

            Once upon a time, when we regularly used CD and DVD disc drives, most of us occasionally experienced the frustration of not getting a drive to open, or close.  These devices use springs and other moving parts that sometimes do not work seamlessly.  Typically, drive failure does not result in a calamity and with some luck we can get the device to work.

            It may surprise you that the Automated Teller Machines have similar moving parts and springs, particularly where they dispense cash, accept checks and issue receipts.  I still use ATMs frequently as I like cash transactions, even though my research of credit card platforms informs me that I am subsidizing card users.  ATMs rarely fail and the most likely culprit is insufficient cash to dispense.

            Imagine my surprise when an ATM cash dispenser did not open to disperse the cash I requested: lots of beeps, followed by confiscation of my ATM card.  Lucky for me, the ATM machine failed during banker’s hours.  I made my way to a live teller, but she had little good news for me.

            In a nutshell, the ATM machine documented my transaction as completed with no problem. 

Accordingly, I have to “dispute” the debit of funds from my bank account, because the burden of proof lies with me. It’s my word versus the machine’s documentation. I will recover my $300 if and only if a manual, human accounting of transactions shows a $300 surplus.  Then and only then, will a bank manager accept my work and credit my account.  Any anomaly, like the absence of a correct surplus amount, and I am out the money.

            A non-negotiable contract governs ATM users and the transactions they generate.  I am sure that somewhere in this unread document, I have agreed that the ATM documentation trumps my word, I have no redress in court and the bank—or more accurately-- the bank’s software will establish the definitive outcome.  Put another way, I am a liar until proven innocent.

            Wish me luck.

How Smart are Algorithms?

            The algorithmic verdict arrived in less than sixty seconds: credit card application denied.

            My application resulted from a clerk’s scripted suggestion at checkout that I could get a 10% reduction on my 4k HDTV purchase at Best Buy simply by applying for their branded Citibank credit card. Sure, why not?

            Imagine my embarrassment when, at point of purchase, with other buyers in line behind me, “Deadbeat Rob” was holding up the line insisting on his creditworthiness.  After a full minute of “careful consideration,” (language contained in the scripted letter from Citibank explaining its verdict), three coordinating players reached a conclusion that I lacked “sufficient credit experience.”

            A pox of all their bourses: Experian for failing to generate a complete record of my credit “experience” and its policy of preventing interaction with a live person, EVER; Citibank for relying on Experian’s lazy, defective and incomplete credit recording; and Best Buy for allowing Citibank and Experian to ruin my interest in ever setting foot in their stores.

            I base my grievances on the common-sense view that I AM credit worthy: nearing 64, I have managed to make timely payments on six figure mortgages and hefty credit card balances.  I have an 800+ credit rating and five figure credit allowances.  I would reach the important 15-20 year experience with the same credit card, but the number drops to zero almost every time I receive an unsolicited, new card, with a different account number, because of a security breach.

            I have plenty of evidence to prove credit worthiness, if Experian and the other credit rating and reporting companies had algorithms making decisions based on the likelihood of not defaulting.  I have concluded that Experian has a mandate to predict likely use of credit, particularly likely need/inclination to pay on time.  Creditworthiness appears to be a secondary consideration.

            It may be that Experian deemed my credit history “inadequate,” because I have this measurable and reportable history of paying debts on time and a predisposition not to incur debt in the first place.  I apparently lack credit experience, because I have not joined the more common ranks of people willing, or obligated to pay 24% or more on credit card debt.

            I did get the opportunity to discuss this matter with a live, breathing human at Citibank.  She started with a scripted response mentioning that I while I did not “qualify” for a platinum colored card, I could receive a gold one upon paying a $59 annual fee.  With some prodding, she suggested that I could become more experienced with credit if I took out a mortgage, paid interest on credit card debt, used my cards more frequently, generated balances closer to my allowance and used more cards—like most red-blooded Americans.

            This experience and my ongoing research of two-sided markets confirm that people who pay in cash subsidize credit card users and encourage debt, perhaps even unsustainable debt. 

            Perhaps the Experian algorithm detected me as someone unlikely to incur debt, or even to use the credit card regularly.  Guilty as charged.