Auto Finance News
  • Home
  • News
  • Big Wheels Data
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Next Webinar (7/15): Digital Strategies for Exceptional CX
    • Webinar Library
  • Podcast
  • Powersports

No products in the cart.

Subscribe
  • Capital & Funding
  • Compliance
  • Risk
  • Technology
  • Best Practices
  • Compliance Monitor
Log In
No Result
View All Result
Auto Finance News
  • Home
  • News
  • Big Wheels Data
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Next Webinar (7/15): Digital Strategies for Exceptional CX
    • Webinar Library
  • Podcast
  • Powersports
BIG Wheels
Log In
No Result
View All Result
Auto Finance News
No Result
View All Result

Zest is Using Math to Comply with CFPB Disparate Impact

William HoffmanbyWilliam Hoffman
March 9, 2017
in Compliance, Risk Management
Reading Time: 3 mins read
0

Douglas-Zest-e1489075579995When you think about the greatest invention of the 20th century, a few key technologies might come to mind: the personal computer, internet, antibiotics, or the electric guitar. But, for Douglas Merrill, founder and chief executive of Zest Finance, nothing compares to the Fico score.

“The Fico score is the most important innovation of the 20th century and no one gives them any credit for it,” Merrill told Auto Finance News. “But then, in 1980, credit availability basically just flatlines. The right question is: What happened there?”

Zest tries to solve this issue by using algorithmic techniques, artificial intelligence, and machine learning he studied during his time as the chief information officer at Google before leaving in 2008. The company’s newly launched auto finance software aims to provide credit to consumers traditionally considered too risky by adding more points of information than a traditional Fico score provides.

Fico scores also helped to limit discrimination in auto finance, and the Zest platform aims to bring more data to that process, as well. Zest estimates it can decrease discrimination in the industry by providing tools that will allow lenders to comply with the Consumer Financial Protection Bureau’s rules on disparate impact, using the guidelines of the BISG model.

“There is always some disparate impact, but the tricky part is, the law doesn’t say you can’t have any disparate impact, it says you can’t have any ‘material disparate impact,’” said Merrill, who worked at the company that developed the model — Rand Corp. — for five years. 

The platform can take the predicted economic outcomes of a protected class and overlap the actual economic impact the lender is having on that group of people. For example, Chinese borrowers are expected to perform one way in a portfolio, so do the lender’s terms lineup with that prediction? Or are Chinese borrowers being adversely affected by the financing practices — intentionally or unintentionally.

This is something sports analysts have done with statistics for years. For example, you might take NBA star LeBron James’ past history of hitting three-point shots for the Cleveland Cavaliers and form a model that predicts how many he’s expected to make in 2017. You could then see if he’s performing below or above that expectation, and isolate the factors impacting his performance.

The CFPB does not state that all protected classes need to have equal approval rates, it only requires that lenders do not discriminate knowingly, and to the extent that there is unintentional discrimination, Merrill said. Lenders have to mitigate it, he added.

Zest would look at a lender’s predicted and actual outcomes to determine if — for example — Chinese borrowers are experiencing “material disparate impact” under the financial institutions current practices, he said. If those protected classes are being economically affected by the lender’s practices then they have the tools to mitigate it.  

“So, you can do this often enough that even if you made a mistake, and you’re building some disparate impact over time, you’ll know in a week instead of a month and fix it right away,” he said.

https://www.youtube.com/watch?v=NeRJ4iuRQqw

Tags: BISGBureau of Consumer Financial ProtectionCFPBdisparate impact
Previous Post

Westlake’s Portfolio Grew 23% in 2016

Next Post

MotoLease Pursues Partnership With Training Association to Educate Millennials

Related Posts

used cars in parking lot sun in back
Risk Management

Q2 used-vehicle values buck seasonal trends

July 10, 2025
An employee works on a vehicle on the production floor at the Hyundai Metaplant in Ellabell, Georgia, U.S., on Wednesday, June 11, 2025. Photographer: Elijah Nouvelage/Bloomberg
Risk Management

US jobless claims fell a fourth week during July 4 holiday

July 10, 2025
(Courtesy/Bloomberg)
Risk Management

GM Financial CEO Sheffield joins fireside chat at Auto Finance Summit 2025  

July 9, 2025
Next Post

MotoLease Pursues Partnership With Training Association to Educate Millennials

Please login to join discussion

Stay Informed with Our Newsletters

PowerSports Finance

The Roadmap Podcast

SPONSORED

Making zero-touch funding a reality

May 22, 2025

The Hidden Bottlenecks in Dealership Financing—And How to Fix Them Fast

April 28, 2025

Tax Refund Season is Here—Is Your Dealership Ready to Handle the Surge?

March 13, 2025

ABOUT US

HELP CENTER

ADVERTISE

PRIVACY TERMS

ADA COMPLIANCE

CODE OF JOURNALISM ETHICS

Manage Cookie Consent

EXECUTIVES OF THE YEAR

AUTO FINANCE EXCELLENCE AWARDS

MAGAZINE ARCHIVE

INDUSTRY GLOSSARY

facebook linkedin twitter podcast podcast
© 2025 Royal Media
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

THIS WEBSITE USES COOKIES

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “I CONSENT”, you consent to the use of ALL the cookies.

Cookie settingsI CONSENT

Review our Cookie Policies
.
Manage Cookie Consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
34f6831605sessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
a64cedc0bfsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
crmcsrsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
JSESSIONIDsessionThe JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
LS_CSRF_TOKENsessionCloudflare sets this cookie to track users’ activities across multiple websites. It expires once the browser is closed.
LSKey-c$CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesThis cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
_zcsr_tmpsessionZoho sets this cookie for the login function on the website.
663a60c55dsessionThis cookie is related to Zoho (Customer Service) Chatbox
e188bc05fesessionThis cookie is set in relation to Zoho Campaigns
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
CONSENT2 yearsYouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data.
vuid2 yearsVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
__Host-GAPS2 yearsThis cookie allows the website to identify a user and provide enhanced functionality and personalisation.
_dc_gtm_UA-1038974-31 minuteUsed to help identify the visitors by either age, gender, or interests by DoubleClick - Google Tag Manager.
_fbp3 monthsThis cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
fr3 monthsFacebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
VISITOR_INFO1_LIVE5 months 27 daysA cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface.
YSCsessionYSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages.
yt-remote-connected-devicesneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt-remote-device-idneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt.innertube::nextIdneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
yt.innertube::requestsneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
caf_ipaddrsessionNo description available.
citysessionNo description available.
countrysessionNo description available.
gnt_eidsessionNo description available.
gnt_eu6 hoursNo description
iamcsrsessionZoho (Customer Support) sets this cookie and is used for tracking visitors (for performance purposes)
systemsessionNo description available.
traffic_targetsessionNo description available.
Save & Accept
Powered by CookieYes Logo