I hate you, Jeff, and I hate your friends.
Some ideas that brilliant young people have in the technology field should have remained unthought, and if thought, promptly rejected on the grounds that however clever and profitable, they will make the world a crummier place. This is one of those ideas:
From CNN Money we learn that Lenddo, a new financial lending companies (apparently none of the brilliant young people work in the marketing department—Lenddo???) has figured out that one’s Facebook friends, and how friendly you are with them, are a revealing indicator of your credit worthiness. If one of those FB friends is late paying back a loan to Lenddo, their data indicates that it means you are more of a credit risk than if that friend was right on time. Not only that, if the delinquent friend is someone you frequently interact with on the social network, it means you are even more likely to be a deadbeat.
“It turns out humans are really good at knowing who is trustworthy and reliable in their community,” happily crows Jeff Stewart, a co-founder and CEO of Lenddo. “What’s new is that we’re now able to measure through massive computing power.” Fascinating, Jeff!
You suck.
It is not as if getting loans isn’t hard enough. Now Lenddo wants to add guilt by association to the mix. Do you want that mortgage or car loan at a good rate? Un-friend your financially struggling friends, then. Never mind the reasons for their difficulties—illness, catastrophes, humble origins—if they aren’t of the proper class and financial wherewithal, their problems will now reflect poorly on your judgment and character. Meanwhile, the financial difficulties I have on my own aren’t enough for me to worry about—now I have to feel guilty because the debts I ran up starting something as crazy as an ethics business might stop my best friend or sister from getting a loan to start their businesses. Will this create an obligation for me to inform my Facebook friends that my credit scores just took a dive, so they can treat me like the social networking pariah I deserved to be? I think so. Should I check out the financial history and stability of the sender of that new friend request? I’d better.
Lenddo’s innovation, it seems, will make having social contact with anyone without two degrees, a trust fund and a ritzy address a risk to our future success and happiness, and those of our families. In order to have one more technological tool to justify lowering my credit score, Jeff and his company are willing to further stratify America, encourage racial and ethnic divisions —after all, the statistics say white friends are more likely to have good credit scores than black or brown ones—discourage the kind of cross-socioeconomic group networking that can help people overcome the handicap of class, institutionalize group bias, and make choosing who to send happy birthday wishes to on Facebook just one more monetized activity.
In a word, yechh. Using even a forgiving utilitarian standard, this innovation will achieve marginal benefits to lenders while making life for the rest of us just a little bit nastier and unfair. That makes it unethical, by my calculations. People like Jeff Stewart, who don’t consider the unintended consequences to society of their brave new ideas, or if they do, don’t care as long as the profit is great enough, create a constant downward pressure on society, causing it to be more stressful, more difficult, and just plain crummier as time goes by.
Come to think of it, I bet his Facebook friends are likely to be this way too
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Sources: CNN Money
Graphic: Microdinero
Ethics Alarms 
Just another reason to make me feel good about having gotten the heck off facebook a couple of years ago. It’s super, super creepy. I didn’t need to be told I could “be friends” with my high school buddies’ twenty-something daughters and their come-hither “selfies.” Yuck.
Yuck, indeed. But to be fair, there isn’t much about the ‘credit score’ concept that I don’t already find reprehensible, so this can just be added to the pile.
That is a another reason to avoid FB making them lose more users. Friends and relatives having reverses don’t need a scarlet “L” on their foreheads.
Enjoy FB and all the connections and re connections and re connections I’ve made.. However, unless a person doesn’t have a credit history, their credit worthiness is based on their credit history..
And if someone with a good credit history associates with someone who doesn’t, that falls into the SO WHAT category. Credit worthiness, much like musical ability is very personal…
Will this be an opening post to a series covering the ethics of supercrunching and meta-data use for marketing?
If you have a good credit history you could rent out your face book friendship.
Then ruin your own credit (well, in the eyes of this company)
Create fake people with spotless credit scores, then rent out their friendships. Who can pile the most ethics violations into a single scenario here? Suggestions would be including illegal aliens, John Edwards, wikileaks, and Jesse Jackson, Jr.
As I tell Mrs. Zechman over and over when she complains about Facebook…
YOU are NOT their customer.
Facebook’s customers are the people who purchase all that data that you put out there (along with the advertisers).
The idea that anything you put on Facebook won’t or shouldn’t be used for any nefarious purpose that someone with the money to purchase that data thinks up . . . is a non-starter.
–Dwayne
There’s an inherent problem with positive feedback in the concept that will mean it will have only temporary utilitarian value.
In other words, it will become less useful as a tool for determining the appropriate degree of risk of any loan. It will, like all such plans, cause modification of behaviour to game the system. You can’t measure something like this and give consequent rewards/punishments without changing it. Unless you did it secretly – but this particular feline has now escaped containment.
Soon, the most untrustworthy will do as has been discussed in the comments – shape friend-profiles, possibly with mythical accounts, so there will become a negative, not positive, correlation.
And by discouraging the kind of cross-socioeconomic group networking that can help people overcome the handicap of class it will also increase the absolute quantity of risk. I think lenders with any sense will realise that as well as both you and I do, Jack