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.