mathbabe

When it comes to alternative credit scoring systems, look for the phrase “we give consumers more access to credit!”

That’s code for a longer phrase: “we’re doing anything at all we want, with personal information, possibly discriminatory and destructive, but there are a few people who will benefit from this new system versus the old, so we’re ignoring costs and only counting the benefits for those people, in an attempt to distract any critics.”

Unfortunately, the propaganda works a lot of the time, especially because tech reporters aren’t sufficiently skeptical (and haven’t read my upcoming book).

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The alt credit scoring field has recently been joined by another player, and it’s the stuff of my nightmares. Specifically, ZestFinance is joining forces with Baidu in China to assign credit scores to Chinese citizens based on the history of their browsing results, as reported in the LA Times.

The players:

1. ZestFinance is the American company, led by ex-Googler Douglas Merrill who likes to say “all data is credit data” and claims he cannot figure out why people who spell, capitalize, and punctuate correctly are somehow better credit risks. Between you and me, I think he’s lying. I think he just doesn’t like to say he happily discriminates against poor people who have gone to bad schools.
2. Baidu is the Google of China. So they have a shit ton of browsing history on people. Things like, “symptoms for Hepatitis” or “how do I get a job.” In other words, the company collects information on a person’s most vulnerable hopes and fears.

Now put these two together, which they already did thankyouverymuch, and you’ve got a toxic cocktail of personal information, on the one hand, and absolutely no hesitation in using information against people, on the other.

In the U.S. we have some pretty good anti-discrimination laws governing credit scores – albeit incomplete, especially in the age of big data. In China, as far as I know, there are no such rules. Anything goes.

So, for example, someone who recently googled for how to treat an illness might not get that loan, even if they were simply trying to help their friend or family member. Moreover, they will never know why they didn’t get the loan, nor will they be able to appeal the decision. Just as an example.

Am I being too suspicious? Maybe: at the end of the article announcing this new collaboration, after all, Douglas Merrill from ZestFinance is quoted touting the benefits:

“Today, three out of four Chinese citizens can’t get fair and transparent credit,” he said. “For a small amount of very carefully handled loss of privacy, to get more easily available credit, I think that’s going to be an easy choice.”