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Your Facebook Friends May Soon Influence Your Credit Score

And you can blame Friendster.


Facebook's much-maligned real-name policy normally attracts attention for the pressure it places on drag queens, Native Americans, domestic violence survivors, and people with names like Kenyatta Cheese. But a bankable motive has now emerged for keeping it in place. Earlier this month, VentureBeat noticed that Facebook received an updated patent from the U.S. Patent Office that tracks the way users are connected. Sounds boring enough, but buried in the patent application is an alarming feature: Lenders would have the opportunity to assess loan applicants in part based on the credit-worthiness of their social network. Journalist Susie Cagle, who laid out the scenario in Pacific Standard, described this capability as digital redlining:

In short: You could be denied a loan simply because your friends have defaulted on theirs. It’s the kind of digital redlining that critics of “big data” collection have been warning of for years. It could make Facebook a lot of money, and it could make the Web even less safe for poor people. And it could be just the beginning.

And the weirdest twist? The patent originally came from Friendster, a.k.a. Facebook's embarrassing aunt that no one's acknowledged in a decade. It turns out that in 2010 Facebook purchased the patent from Friendster, a website long ago doomed to benign cluelessness by MySpace—and then Facebook—until now. Time to fire off a scathing testimonial!

Cagle quotes a financial expert who acknowledges that this kind of data gathering isn't on its face discriminatory. In theory, it could be used to extend credit to borrowers who don't have a traditional credit history, based on the good names of their online acquaintances. But the opportunity to discriminate is one that lenders have historically not exactly passed up

All creepy snooping factors aside, the danger of borrowers paying a price for the online company they keep is that such judgments would be by definition inaccurate. After all, points out Cagle, Facebook networks bear little resemblance to our close ties in real life. Random elementary school classmates and accounts created for your old roommate's cat have no place in a loan determination.

Unless Mark Zuckerberg wants to counteract these effects by personally befriending everyone on Facebook. How 'bout it, Zuck?


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