Do Firefox Users Pay More For Car Loans? 371
RandyOo writes "Someone wrote in to The Consumerist to report an interesting discovery: while shopping online for a car loan, Capital One offered him different rates, depending on the browser he used! Firefox yielded the highest rate at 3.5%, Opera took second place with 3.1%, Safari was only 2.7%, and finally, Google's Chrome browser afforded him the best rate of all: 2.3%!
A commenter on the article claims to have been previously employed by Capital One, and writes: If you model the risk and revenue of applicants, the type of browser shows up as a significant variable. Browsers do predict an account's performance to some degree, and it will affect the rates you will view. It isn't a marketing test. I was still a bit dubious, but at least one of her previous comments backs up her claims to have worked for a credit card company.
Considering the outcry after it was discovered that Amazon was experimenting with variable pricing a few years back, it seems surprising that consumers would be punished (or rewarded), based solely on the browser they happen to be using at the time!"
Re:Repeat after me (Score:5, Insightful)
Who's saying it is? Correlation is really all insurance rates need to be based on.
Re:Oh, come on (Score:0, Insightful)
Wow. Browser-based elitism in an article about browser-based interest rates.
Inclination towards technology isn't an indicator of education. I know many people who are professionals in various fields and just use their laptop for browsing, Facebook, and light gaming. These are people making at least double what I'm making in IT, and they're on Internet Explorer.
And then there's the starving artists out there on Macs....
Re:Repeat after me (Score:4, Insightful)
The phrase "correlation is not causation" is strongly correlated with stupidity.
Re:Its the USERAGENT string (Score:3, Insightful)
This opens up a very interesting can of worms. I wonder how many other companies selling products that vary on a per-customer basis are using this information? Car insurance is another one that springs to mind, particularly if you live in a part of the world where it's compulsory.
Re:Oh, come on (Score:5, Insightful)
Obviously you fail to understand how my superior browser makes me a better human being than you. As such, I will disregard the rest of your post. It is likely just to bore me, or possibly even lead to a headache. When you realize the error of your ways, and are willing to admit that I am right in this and all things, I will once again indulge you.
Re:Repeat after me (Score:5, Insightful)
Re:Repeat after me (Score:3, Insightful)
"Correlation is not equal to causation" is what an unintelligent person says when they wish to sound intelligent. it's something they once heard they thought was clever, and they think that by aping this simpleminded thought they are adding something to the conversation, when they are just generating useless noise
an intelligent person would actually be looking at the merits or lack thereof of the correlation, and talking about if causation is implied or not
Re:Oh, come on (Score:4, Insightful)
Re:Repeat after me (Score:4, Insightful)
Blindly stating 'Correlation is not equal to causation' is not evidence against causation.
If true, it is stupid (Score:3, Insightful)
Re:I wonder (Score:3, Insightful)
Exactly. Even if you're the most financially prudent giant on Earth, if they're dealing with thousands of people they'll gain overall by betting the way the correlation lies.
That's how it works (Score:3, Insightful)
The entire insurance industry is based on the principle of retaliation against customers who cost the company money and rewards for those who dutifully pay more than they claim. Any statistical basis they can use to figure out which customer is which ahead of time... they'll use. The only ones they (usually) won't use are those prohibited by law; instead they look for some other factor that correlates strongly, and use that instead. So if they aren't allowed to use race, they'll use neighborhood... if they aren't allowed to use neighborhood, they'll look for something else. Maybe ISP, or IP address block, or OS, or.... browser. They don't care, as long as there's a good correlation. It's not that they hate Firefox users, any more than they hate people of a particular race or ethnic group or neighborhood or religion or credit score or driving record... they just don't care. Like any "good capitalist" they want to maximize profit.
Re:Repeat after me (Score:5, Insightful)
Only when used in idiotic contexts like the first post.
In this case, they are looking for patterns, and the actual cause is irrelevant, if they notice patterns that indicate higher risk, regardless of the root cause, they follow them.
Now, there are correlations (violent video game players have a higher incidence of violent activity) that, by themselves, do not imply causation (further tests are needed for causation). When someone tries to use these as an implication of causation, then the phrase "correlation does not imply causation" is quite intelligent.
And, I just implicitly defended Capital One. I feel morally dirty now. Thanks a lot.
Re:Repeat after me (Score:1, Insightful)
"Correlation is not equal to causation" is what an unintelligent person says when they wish to sound intelligent. it's something they once heard they thought was clever, and they think that by aping this simpleminded thought they are adding something to the conversation, when they are just generating useless noise
an intelligent person would actually be looking at the merits or lack thereof of the correlation, and talking about if causation is implied or not
Perhaps, but even considering true that most people who use that phrase are unintelligent wishing to sound intelligent, It doesn't mean that all people using that phrase are unintelligent and using the phrase out of context. To support what I'm saying: "correlation is not causation"
Re:Repeat after me (Score:3, Insightful)
True, but where there is correlation you have to look for causation. Occam's razor -- Can you come up with a better explanation as to why one would get different rates using different browsers? If not, then you have to suspect causation. If so, then you have to find another cause.
And of course what nobody has looked at (Score:3, Insightful)
Is what rates do you actually get? Just because they print a rate on their site doesn't mean you may not get a higher or lower rate when you actually get approved for the product, after they've looked at things that actually matter.
I have trouble believing a random poster that claims to have worked there that this actually influences things. Really? Then where is the actuary data on this, and why isn't it something asked on home loans? Anything that has a significant predictive value int terms of loan performance, banks want to know. Given that home loans are some of the most major loans, they check everything they legally can. If browsers really were such a major predictor, they'd ask on your home loan app.
To me this looks like an error. I cannot believe that the browser a person uses is a good enough performance predictor that they'd offer a 1.2% difference in interest rate (which in the context of these loans is a 35% difference in interest). That is like 100 FICO score kind of interest difference, or more. No way the browser someone uses accurately predicts loan performance to the point of being worth it.
Just remember that the rates on the site are advertising rates. Who know show the hell they decide what it should show or why JS is involved, but that it hows it has nothing to do with the rate you'd actually get when you apply. Not only is the rate they show always the "Very best credit," rate but it often has other provisos. For example when I was looking at a home equity line of credit, the bank had a rate listed on their site that, when you dug in to it, only applied if you got a $250,000 or larger line of credit AND took out $100,000 or more AND kept it out for several months. Ok well that isn't unrealistic (sometimes you finance home construction with such a loan) but clearly most peopel aren't getting that rate.
This has zero effect on your actual rate. (Score:4, Insightful)
This is just the advertised rate, which is always based on parlor tricks and weird math. Your actual rate is calculated after your application and credit check are reviewed, and neither of those things care what browser you use.
This makes sense if you think about it. The bank wants to advertise a rate that is appropriate to you, but it doesn't know much about you until you apply. So it has to guess based on the very limited information it does have. Otherwise -- and this still happens all the time -- you see an ad that says 'Low low 2% APR!' and then you apply and find out that you qualify for 6% APR and get pissed off. If looking at your USER_AGENT reduces the spread between what they promise and what they get, it makes sense for them to do it. But don't let that get in the way of your populist rage.
Re:Repeat after me (Score:5, Insightful)
Which is why this is likely marketing or an error (Score:3, Insightful)
And not actual rate differences. Remember that nothing they list there is anything but marketing. Your rate isn't your rate until you actually apply. A number on a website is just promotion/information. It isn't a binding offer of any kind. They'd need a credit check at the very least before they'd be willing to make an actual offer.
Now, as you said, the one and only concern with loans is established risk. What factors (that they are legally allowed to consider) increase or decrease risk? All they are interested in is coming up with a probability of default, and then deciding if they want to make the loan and at what rate based on that.
Well browsers just don't seem to play a role. I've heard of no studies, no evidence, that choice in browser indicates anything with regards to handling money. Without such research, it would be a meaningless metric to use.
Also notice that the rate difference is LARGE. Something like that means a significant risk difference. Even if browsers factored in, you really think it'd be that much? You think they'd offer over a percent just based on the browser?
Not hardly. Unless someone can provide some actuary data showing that this has been looked at scientifically, I do not believe it is actually a deciding factor, just some Javascript being squirrely.
Re:This calls for a ... (Score:2, Insightful)
One would think that credit analysis would be done by generally accepted rules, like credit score. I like to use Firefox, but I have a score over 800. Should I pay a high rate because of my browser choice when I've 'done it right' in every other way? Someone will tell you if your credit is bad and THAT is why your rate sucks, but when you base that decision on (seemingly) unrelated data and not telling you about that, it's fishy.
Re:This calls for a ... (Score:3, Insightful)
Re:Repeat after me (Score:3, Insightful)
Re:Repeat after me (Score:5, Insightful)
Or in the case of fields like marketing and insurance, causation is irrelevant if the correlation is strong enough.
If teenagers have a 1% chance of getting into an accident in their first year being insured with the company, but ones with red cars have a 3% rate, you don't have to prove any causal relationship between car color and ability to drive, you just play the numbers and raise rates accordingly. Business decisions don't have to be rational, they just need to be right 51% of the time to stay in business.
Re:Repeat after me (Score:3, Insightful)
As a general principle, no, you don't. As a rule of thumb, you are probably safer assuming that a correlation between two variables is the result of a common cause. E.g., in humans, height over 6'5 is strongly correlated with usage of urinals. At no point should you bother to rule out causation (in either direction) in this case.
A more practical example is the media's constant repetition that healthier people have more sex. Of course, they jump to the sexiest but dumbest possible conclusion, that the sex causes the health. But we don't even have to assume that the health causes the sex; in fact we can intuit that health must be only partially the cause, since many healthy behaviors will increase attractiveness completely aside from their health benefits. (Especially diet and its effect on body shape.)
The general principle is that any one cause will have myriad effects, all of which will be correlated with one another. By default, assume a common cause.
Re:Repeat after me (Score:5, Insightful)
People who blindly yell 'Correlation is not causation' should be slapped with a trout.'
Yeah, but where would we get a trout? For me, fishing is NOT correlated with obtaining a trout, it's correlated with getting angry or drunk.
Firefox Plugin Opportunity? (Score:3, Insightful)
Sounds like a good opportunity for a firefox plugin.
What's in YOUR browser? (Score:3, Insightful)
Re:Repeat after me (Score:3, Insightful)
Why should the interest rate depend on a credit check..? If I was advertised a certain rate on the website and then they turned around and said "actually, the real interest rate is 5%", I'd tell them where to go.
And they'd tell you where to go.
And you'd have to walk, because you didn't get the car loan.
Re:Repeat after me (Score:3, Insightful)
On Slashdot, it's stupid and irrelevant more often than not. People just post it because they have read it before and seen it get +5, insightful. You see it posted every single time there's a story about some indicator of something or other. So the correlation is certainly there.
I think there might be a weak causal relationship as well, since so many slashbots seem to just break down and stop thinking when they come across indicators and other correlations, believing the right answer is to mindlessly harp on about the same old meme, and thus spread it -- in the same mindless form. Most people intuitively understand the difference between correlation and causation, but when they are infected with this nasty little meme, they seem to lose the ability to understand what a correlation is.
Re:That's how it works (Score:2, Insightful)
Re:Repeat after me (Score:1, Insightful)
Technically this is about loan rates not insurance rates, but we could take it as self insurance by the lender against the risk of default.
To your point...
Correlation *in the future* is what insurance rates need to be based on. Correlation in the past may or may not imply this.
Causation would tend to imply correlation in the future, as would causation of both elements by a common cause that's unlikely to change quickly (say, a person's level of responsibility). Statistical happenstance does not imply future correlation - just because there was some correlation between people who flipped heads at the beginning of last year and default rates doesn't mean there will be next year. Causation by factors likely to change also doesn't imply things about the future, and can drown out other relationships.
The question is which of these are represented in the relationship between browser choice and defaults. Whatever was the case in the past, given how easy browser choice is to change (particularly for visiting one particular site) I expect in the future the primary cause of choice of browser will be knowledge of its influence on rates.