The USPTO has granted Facebook (FB) a patent that could be used to help lenders determine your creditworthiness. The Social Networker plans to allow creditors to look at who is in your social network to judge your creditworthiness.
Business Insider says the patent would make it possible for banks to check the credit rating of the members of your Facebook network to decide if you are worthy of a loan. It seems that your shiftless uncle Louie is going to determine if you get a mortgage. According to BI, the patent states:
… 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.
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he patent was first discovered by Atlanta legal tech start-up SmartUp was part of a bundle of patents Facebook acquired in 2010 when it purchased the patents from failed social network Friendster for $40 million.
BI reports that the patent may walk a legal tight rope. The U.S. Equal Credit Opportunity Act requires creditors to tell applicants why they have been denied credit, so using social data to determine someone’s credit risk could walk a fine line. Despite federal law, the author points out that financial institutions are already using applicant’s social data to help verify their identity. For example, Lending Club, and Affirm use online data for decision-making.
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Back in 2010, I wrote about this day coming.
Many banks are now outsourcing their social network data mining operations to firms such as Rapleaf. (now TowerData).
Maybe it is time to un-friend your kid in college with no job and crazy aunt Patti in Paducah and instead friend Warren Buffet, Bill Gates, and Mark Zuckerberg.
Related articles
- Proposed Legislation Aims to Halt Consumer Credit Profiling By Insurance Companies (autoinsurancecenter.com)
Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.