How TransUnion’s Neustar acquisition will help mitigate online fraud

TransUnion CEO Chris Cartwright joins Yahoo Finance to discuss TransUnion closing a $3.1 billion deal to acquire Neustar, hoping that this latest acquisition will diversify the company's offering and the looming threat of fraud attacking consumers.

Video Transcript

- We have some deal news to kick off this week. Credit monitoring company TransUnion is shelling out $3.1 billion to buy ID fraud protection player Neustar. Joining us now with insight into the deal is Chris Cartwright, TransUnion's CEO. Chris, good to see you on this morning. Congratulations on this deal. So you're paying a little bit more than when Golden Gate took Neustar private in 2016, about $2.9 billion. Why'd you make this deal?

CHRIS CARTWRIGHT: You know, for any number of reasons. You know, most people know TransUnion as one of the leading consumer credit reporting agencies in the world. And that's true. We operate in over 30 markets. Additionally, though, in recent years, we've focused on developing digital marketing solutions as well as online fraud mitigation solutions so that consumers and businesses could transact with greater confidence. And that's where Neustar comes in.

Neustar is a market-leading player in digital identity resolution. Simply put, that means that they've got great data and analytics and technology for determining exactly who is on the other end of a transaction or what is on the other end of a transaction. Together with our data and our global reach, you know, we think we're going to be able to create a complete solution for clients. And we're just super excited about the transaction and the opportunity for growth that it creates for the combined enterprise.

- Chris, how much-- the pandemic is obviously still raging on. How much more of a problem is fraud becoming?

- Yeah, that's a great question. I mean, before the pandemic, you know, e-commerce was a huge and growing-- rapidly growing-- part of the economy. And then the pandemic turbocharged that growth. Unfortunately, you know, online cyber crimes are also getting turbocharged, and businesses and consumers need parties that, you know, bring the data and analytics necessary to create that online trust.

Now, part of our vision at TransUnion is to make trust possible between consumers and the businesses they interact with. At our core, credit information is one of the key enablers of that. But in recent years, combining, you know, the information we have on consumers and a wide array of digital information on consumers, on their devices, on the locations from which those devices typically connect to e-commerce, well, we're able to extend the range of problems that we solve for clients into targeting the right customers with the right offers, creating great online service experiences for them, and, of course, you know, ensuring their safety and security in that transaction.

JULIE HYMAN: Hey, it's Julie here. Another way of saying that is that you're selling people's data more in order to monetize data. I think it's safe to say, right, that that's part of what you're doing. So then, is the Neustar acquisition also an effort to additionally safeguard that data as you increasingly monetize it?

CHRIS CARTWRIGHT: Yeah, look, there's a couple of ways to react to that. You know, privacy is of real concern to consumers, obviously. And, you know, the amount of data that's created in digital transactions, well, it's a double-edged sword. One, it can be put to ill use, but it can also be used to create really secure and personalized transactions online.

Our industry is heavily regulated, as you know. The credit part of the industry operates under the Fair Credit Reporting Act. It gets a considerable amount of regulatory scrutiny. And TransUnion has spent a tremendous amount of resource and focus on ensuring that we've got world-class capabilities in information security.

Now, you know, any player in this space will tell you that securing that data is not only our paramount mission, but it's a never-ending challenge, right? It's a very difficult environment. And so we continue to focus on it and invest in it.

And I'd also point out that, you know, the regulatory framework under which we operate, it makes it very clear what information we can collect and how it can be used, and it also enables consumers to see the information that we have and dispute any inaccuracies. So we feel pretty good about the investment that we make in privacy and compliance. It's designed into our products from the beginning.

JULIE HYMAN: And Chris, as you know, we recently spoke with an administration official, one of the top cybersecurity folks, because, as you know, the administration is making a bit of a push to increase cybersecurity, not just for the credit industry, but, of course, for corporate America more broadly. Is there anything on that front that you think still needs to be done in terms of making corporate America safer?

CHRIS CARTWRIGHT: Well, you know, just as I was discussing, cybersecurity is a bit like national security. You can invest in it. You can apply tremendous resources and focus. But you can never say that you've done all you can do, and that it's perfect, and you guarantee the safety.

And I think a healthy level of paranoia is really helpful and actually required, because cyber criminals and nation-states are smart and resourced and aggressive, and there's a lot of opportunity for fraud here. And so I think every business, and in particular, information-intensive businesses like the bureaus, have got to make information security central to their business operations. It's really the first order of business for us.

- Chris, we've seen-- we're starting to see a shift in tone in corporate America as the third quarter comes to an end here. A lot of companies have come out cautiously, Delta variant, inflation, you name it. What are you seeing in your business, and are you still on track to achieve your guidance?

CHRIS CARTWRIGHT: Yeah, we feel pretty good about the way the year is shaping up. Obviously, we posted a very big second quarter. Now, you know, the comparables from last year were soft, given that's when the pandemic had its most pronounced impact on the economy and on our business in particular.

But, you know, without giving particular guidance or confirmation, I can say that we still see a lot of strength in the consumer during the pandemic. You know, ironically, credit scores actually increased for many, many Americans. And I think it's because of government actions that ensured that they had an income and that they had enhanced unemployment benefits, combined with all of the loan forbearance that lenders put in place across the economy.

And also, you know, it was difficult to consume, so consumers delevered. We have vaccines. The economy has picked up. And we see, you know, a pronounced increase in marketing activity in the lending space. Now, that said, if the pandemic-- you know, the Delta-fueled chapter of this pandemic, you know-- worsens sufficiently, that could really temper the reemergence of the economy. But so far, we're not seeing that, and we're feeling pretty optimistic about the full year.

- All right, we'll leave it there. Good to hear that, and congratulations on this deal. TransUnion CEO Chris Cartwright, have a great rest of the week.