In a further sign that the major credit bureaus are moving firmly into direct marketing, TransUnion LLC said Tuesday that it had bought Douglas-Danielle Inc., a 5-year-old seller of Web tools that help companies solicit new customers or collect money from old ones.
Both TransUnion and Douglas-Danielle sell products and services to lenders, and the deal, which closed Friday, will help the two Chicago companies fuse their offerings. For instance, lenders that use Douglas-Danielle's account acquisition technology, which directs consumers to the Web to apply for loans, will be able to use TransUnion's credit reports and decisioning technology once people apply.
Though TransUnion is not a newcomer to the direct marketing world, "Douglas-Danielle brings some capabilities that we don't have that we can bring to other customers," said Jeffrey Junkas, a TransUnion spokesman.
TransUnion and its major competitors, Equifax Inc. and Experian Inc., have all been busy exploring ways to capitalize on their tremendous databases without setting off consumer privacy alarms. Last year Equifax bought Naviant Inc., which maintains marketing lists, and said it was mindful of the Chinese wall separating its credit-reporting business from its marketing operations.
Douglas-Danielle, which has 48 employees, sells products that help lenders acquire new accounts, cross-sell existing customers, and collect on overdue accounts. Bank of America Corp. is a major client of its online collections service, which directs delinquent debtors to a dedicated Web site where they can work out a payment plan without the potential embarrassment of talking to a phone representative.
The product fits with other services sold by TransUnion aimed at helping lenders to optimize their collections activities. One such product, for example, identifies those accounts from which lenders are most likely to collect.
Another Douglas-Danielle product creates direct mail solicitations - say, for preapproved credit offers - and directs interested recipients to dedicated Web sites to apply. It is here where TransUnion's technology can come into play, Mr. Junkas said. A lender running such a program could use TransUnion's database and other services to evaluate the loan applicant.
"This is definitely a direct marketing feature first," Mr. Junkas said. "But we're not just providing a raw credit report. We are leveraging some of our analytic services."
Douglas-Danielle will continue for now to operate under the same name and structure. Its president and chief executive officer, Michael Browning, who became a group vice president of TransUnion after the deal closed, said Tuesday that his firm's new parent "has a lot of technology and analytical solutions that we frankly didn't have."
TransUnion, which is part of the Marmon Group owned by the Pritzker family, did not disclose the price of the deal.
Considering the strength of those non-credit-report businesses at TransUnion, the acquisition should work for TransUnion, sources said.
"If you think of this as a credit reporting agency hopping into digital marketing, then it doesn't make a heck of a lot of sense," said Scott Kessler, an equity analyst at Standard & Poor's. "But if we're talking about a company that collects, aggregates, and evaluates data, then there would seem to be a number of different possible applications that can work in a variety of contexts."
TransUnion's acquisition follows a trend by the major bureaus to bulk up those businesses not involved in the selling of consumer credit reports - a product under considerable pricing and now regulatory pressure. Legislation to update the Fair Credit Reporting Act, which was approved by the House on Friday and the Senate on Saturday, entitles all Americans to a free annual copy of their credit report from each of the three major bureaus, TransUnion, Equifax, and Experian.
The provision puts a damper on the burgeoning direct-to-consumer market, in which the bureaus have been selling credit reports and scores, along with identity theft protection and other services, at a fast clip online. Sources say the cost of the FCRA amendment would come not only from furnishing the credit reports to millions of consumers but also from resolving the disputes that are sure to follow such an all-out disbursement of credit data.
But some analysts say the net effect of the provision may be positive for the bureaus. More consumers looking at their credit reports could mean a wider pool of potential subscribers to the bureaus' more sophisticated, more expensive services like score monitoring and identity theft protection.
"The initial reaction has been that if you now charge people for these products, you'll be losing out on potential revenue" once the products become free, Mr. Kessler of S&P said. But "in the end, you might get a bigger consumer base" for the entire line of products.
In the meantime, the bureaus are continuing to put eggs in other baskets. One attractive alternative to the sale of consumer credit data is analytics, formula-based consulting that purports to help lenders make better and more profitable credit decisions. Though analytics has long come under the domain of Fair Isaac Corp., all three bureaus have begun marketing similar services to lenders.
Thatcher Thompson, an analyst for CIBC World Markets, called the push into analytics a smart move. "It drives good margins and adds value on top of [the business of] credit data," he said. The bureaus, he added, have been eyeing Fair Isaac's impressive growth over the last decade. "Equifax and TransUnion are trying to build similar models."
