Tag Archives: Credit

Facebook Obtains a Patent Related to Credit-Worthiness Calculations Based on Your Social Network

Last week, Facebook obtained a patent that allows for filtering spam emails, improving searches, filtering offensive content, and using a person’s social network to determine their credit worthiness.  CNN Money describes in a recent article how the credit risk analysis works:

“You apply for a loan and your would-be lender somehow examines the credit ratings of your Facebook friends.

“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,” the patent states.”

Other publications, like the National Journal in this piece and the Consumerist in this post, are writing about the potential harm from this patent.  The National Journal writes, “lenders would have access to the credit scores of your Facebook friends. Judging by their credit scores, a loan could be rejected. It’s guilt by association.”

Both the National Journal and Consumerist emphasize the negative effects this patent could have on social network users who are on the border of good and bad credit because their credit worthiness could gravitate in a particular direction based on their Facebook friends.  The National Journal pointed out that, “There is a major disparity in access to credit between Latinos and Blacks and their White counterparts,” and this new feature could potentially have a disparate impact based on a user’s race.

However, it should be noted that Facebook has not publicly announced whether they plan on using this credit worthiness feature yet.

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Dealing with Debt

Remember to seek out resources when you are dealing with your New Year resolutions.  If your 2015 goal is to deal with your debt, check out these helpful websites (listed below) and articles that offer a different way of thinking about money.

Mohammad Majd’s Article on CNN Money About Investing

Federal Trade Commission’s Guide on Dealing with Debt

Equal Justice Work’s Student Debt Relief Webinars

Department of Education’s Repaying Your Student Loans Website

National Student Loan Data System’s (NSLDS) Website for accessing a full list of your public, not private, student loans

Free credit reports through AnnualCreditReport.com from Equifax, TransUnion, and Experian (Please note that at the time I did this posting, the AnnualCreditReport.com website was down… hopefully, it will be back up soon.)

Harvard’s Guide and Descriptive Chart to Bar Exam Loans that is helpful for anyone in need of a bar loan

The links I listed above are free.  However, if you are overwhelmed and you would rather pay someone to help you with your debt problems there are two agencies I am aware of that are not scams.

The first agency is Student Loan Giant.  This company helps graduates deal with their student loan debt by either reducing it, consolidating it, or offering debt advice.  If you are eligible for a payment reduction on your loans or loan forgiveness, then they do the paperwork for you for a fee.  The company is based out of Florida, but they help graduates across the nation and in most states.  I heard about this program when I need a bankruptcy consult.  I spoke with one of the masterminds behind Student Loan Giant, Ric Feinberg, who is an expert in bankruptcies.  While he no longer practices law because he fully dedicates his time to assisting graduates with their student loan debt, my conversation with him was very insightful and informative.  I am happy to say this is one of those companies that is not a scam.

The second agency is Valley Credit Repair.  This company helps people repair their credit for a fee.  Kim Carpentier, the owner of Valley Credit Repair, is based out of Andover, Massachusetts, but he deals with debtors across the entire state.  He spoke at a Worcester County Bankruptcy Bar event and he talked about the different ways to repair a person’s bad credit.  Also, this company is not a scam.  So, if you need to repair your credit, he can be a good resource.

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Would you bank with Google or T-Mobile?

Watch out, banks!  The financial markets are expanding with the entrance of new competitors!

Back in 2012, Wal-mart was foiled by bank lobbyists and struggled with obtaining a bank charter.  Instead, Wal-mart settled for check cashing and pre-paid American Express cards called Bluebird.

It seems banking for the unbanked is becoming popular among Internet and technology giants.  The Washington Post recently published an article about a survey that Accenture conducted.  Accenture’s survey determined that people are willing to sign up for tech companies like Google, T-Mobile, PayPal, and Apple for banking services.  While this survey was predominantly geared towards young people, the numbers are very favorable towards these tech companies.

The author of the Washington Post article, Danielle Douglas, explains:

“These companies possess a few things that could really pose a threat to banks: an existing customer base, scale and an ability to quickly adopt new technology.

Take T-mobile, which has 49.1 million wireless customers, an established base for the telecom to pitch its prepaid debit card. Many of these folks use T-Mobile’s prepaid wireless phones (15.5 million) for the same reasons that make prepaid cards attractive: There’s no credit check and no long-term contract. And with more people using their mobile phones to transfer money or take pictures of their checks for deposit, having the same provider manage most of the steps in that process could be appealing.”

 Read more about this here.

The next big questions are: how would these banks for the unbanked be regulated?  What do these potentially new tech companies mimicking financial institutions have in store for regulators?  Can regulators adapt fast enough to address this new twist on the financial market?

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NCLC Consumer Law Conference Nov. 7-10, 2013

I want to draw your attention to the National Consumer Law Center‘s (“NCLC”) Annual Conference scheduled for November 7 to November 10th in Arlington, Virginia.  NCLC is well known for their extensive guidebooks on consumer law ranging from topics about student loans to foreclosure law to credit reporting.

The organization just released the agenda for the Consumer Law Conference and the program is filled with hot topics about class actions, the new Consumer Financial Protection Bureau (“CFPB”) regulations, maximizing damages, loss mitigation, litigating debts, and much more.  A full schedule with speaker bios and panel names is available here.  If you want to register for the NCLC Conference, click on this link here to access their website.  NCLC will also offer, for an additional fee on top of the regular registration fee, a one day symposium at the end of the conference on either bankruptcy for distressed homeowners or class actions in consumer law.

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Free Educational Debt Relief Webinars

The Equal Justice Works’ Educational Debt Relief program is offering free webinars on debt relief.  Read more or register for the webinars at the following website.

If you are contemplating whether to consolidate your loans, I found this loan calculator, provided by Fin Aid!, very helpful.  I found it helpful because it allowed me to put all my loans into one calculator instead of having to compute each loan servicer, interest rate, and loan amount repayment plan separately.  Every borrower’s loan situation is different, so pick the plan that is best for you.

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Student Debt Problems

The Volokh Conspiracy posted an article about student debt problems.  Read more about proposed solutions to the looming issues.

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Request to AG Eric Holder and DOJ to Stop New Debit Fees

Most recently, Bank of America announced that they will charge a $5 monthly fee for their debit card users.  It is unclear who exactly would be impacted and whether using your card as a credit card will negate the debit charge usage fees.  But, the Wall Street Journal published an article about the ordeal at the end of September.  Needless to say, Bank of America customers are miffed, angered, feeling betrayed, and a lot of them plan to “jump ship.”  That can’t be good for Bank of America.

Meanwhile, Bank of America blames the Durbin Amendment.  Tim Chen, at US News, clarified what the Durbin Amendment was/is.  In a July 2011 article, he wrote:

“Ben Bernanke announced the Fed’s final regulations on the Durbin Amendment. The charges would be capped at 21 cents per swipe, plus 0.05 percent of the transaction, with the possibility of an additional cent if banks comply with fraud prevention procedures. His decision was far more favorable to banks than expected: the average transaction of $38 would garner a swipe fee of 24 cents, double the initial proposal.

The ruling pleased no one. Banks and credit unions fought the mere existence of the Durbin Amendment, while retailers and merchants accused the Fed of caving in to pressure from the financial industry. Bernanke acknowledged that banks had increased the fees on checking accounts, but said that retailers in competitive markets would pass the savings on swipe fees onto their customers. All in all, he was “unsure” if the Durbin Amendment would be a net gain for consumers.”

I encourage you to read more of his article because the timeline he lays out is extremely helpful.  The Durbin Amendment’s fee limit went into effect on October 1st.

Five House Democrats wrote to Attorney General Eric Holder asking him to get the Department of Justice to investigate whether the Banks and their trade groups are in collusion with each other in regards to fees.

Read more about the House Democrat reaction in this Bloomberg article, the Hill article, and official press release.

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