Are Credit Card Companies Interested In Predicting Divorce?

Consumer behavior and financial health usually are impacted one way or another by a divorce. And according to sources cited by a Daily Beast article, credit card company Visa can predict whether or not your marriage will last.

Swiping your credit card at the office of a divorce attorney in Chicago would be an obvious red flag, but Yale Law School Professor Ian Ayres tells reporters that it's more sophisticated than that. He says Visa's data-mining technique for predicting divorce is a closely guarded secret intended to make sure you keep sending in your payments:

"Credit card companies don't really care about divorce in and of itself--they care whether you're going to pay your card off."

Using data of customers' purchasing habits is increasingly becoming a big business, as creditors try to get a handle on consumer risk. Retailer Canadian Tire, for example, determined through its data-mining of customers that those who buy carbon-monoxide detectors and felt pads for the bottoms of chair legs tend to pay their bills on time.

A former Canadian Tire executive said the following:

"If you show us what you buy, we can tell you who you are, maybe even better than you know yourself."

So what kinds of purchases alert Visa and its partners that a customer might be heading to divorce court? Just what sorts of things do people going through a divorce purchase and what do they cease purchasing?

Visa actually disputes reports that it tracks marital status or predicts potential divorces, issuing the following statement to the Daily Beast:

"These claims are false and any media outlets or authors citing that Visa has such capabilities are inaccurate and wrong."

The technology and know-how is being used by other creditors, as illustrated by the Canadian Tire example, while Ian Ayres and others quoted in the article say it's a very lucrative business.

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