Alternative Finances

Who Users Friend On Facebook Could Affect Their Credit Someday

Most Facebook users have a friends list that is composed of a motley crew of various people they met in high school and college, coworkers, friends they made on vacation, the six or seven friends they’ve made in the last 10 years and a whole pile of people that they feel certain they probably know, even if they can’t remember where from.

In short, with few exceptions, most of us aren’t too choosy about who we friend on FB — until those people post too many political rants/inspirational chain mails and we unfriend them.

However, a new patent rolled out by FB and covered by Popular Science this week indicates that perhaps we all might want to think about getting a little more selective  since in the future the social network just might use our connections to determine our creditworthiness.

Specifically, a new patent issued to FB this week would allow lenders to check one’s friends’ credit scores before determining whether or not to underwrite a loan.

In a fourth embodiment of the invention, the service provider is a lender. When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.

That excerpt is from the patent for “Authorization and authentication based on an individual’s social network.”

If that sounds like it is so creepy it can’t be legal  well, it might not be. The structure of this sounds just a little bit like “redlining,” a now illegal practice that restricted housing loans to people based on their neighborhoods. If one came from the wrong neighborhood  usually defined as a minority neighborhood  one was not getting a loan, no matter how good their other individual factors like credit score, employment and debt repayment history might have been. Redlining was officially made illegal in 1968 by the Fair Housing Act.

FB is more diverse than one’s neighborhood, but physical proximity is one of the things its data sifters ping to when recommending friends to people.

So, got a friend request from a second cousin you no longer remember? Might want to ask them if they have ever bounced a check before saying yes.


To check out what else is HOT in the world of payments, click here.


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