I’ll show you my credit score, if you’ll show me . . .

I just came across the news that Facebook has a patent on an invention that allows lenders to view the credit scores of our circle of friends on Facebook to determine whether or not we are creditworthy. Check out some coverage here.

I couldn’t be more concerned about how social data are being collected in unexpected ways to derive unexpected conclusions. It’s why I’ve tracked this matter of “collective” credit scores for some time. Check here for coverage from almost exactly two years ago.

And here is an earlier post from this blog that slightly predates the 2013 reports on Facebook and credit.

Why new coverage now? Primarily it’s just that an updated patent on this bit of Facebook technology has been granted. But consider the differences in the headlines from the August 2013 report and this one.

In 2013: “Choose your Facebook friends wisely; they could help you get approved — or rejected — for a loan.” The caption indicates that your connections could cut both ways but overall the body of the article is upbeat. The practice of using social data is going mainstream, it reports. Small businesses and consumers who are active in social networking may be able to get loans not otherwise available to them.

In 2015 a very different tone: “Facebook patents technology to help lenders discriminate against borrowers based on social connections.”

In just a few years we’ve seen regulators such as the Federal Trade Commission and academics at schools such as MIT expose the downside of practices like using your friends’ credit scores or other too-big-to-understand data. It seems to me that this passage of time has also begun to expose some hard truths about venture-backed startups using social data to profile people for credit and/or lending purposes.

I don’t think we’re done seeing new lending marketplaces and platforms that emulate this behavior emerge. More money will flow to existing companies in search of the big exit as well as to new companies. Maybe regulators will begin to rein in the worst of the practices. Just forcing some transparency as to data collected and weight given would be good.

The better option is one I have been advocating wherever I can and that’s to introduce new technologies that take the opposite path of secret profiling systems. There is fascinating and patentable technology to be invented that puts people in charge of their data. Or at least gives them visibility.

Otherwise, we have to hope Facebook won’t add a box to fill in credit scores to its friending interface!

–LaVonne

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