Siddity in the City

I came across this article today, read it, and clicked through to the original piece the author wrote.

If you don’t feel like reading, in essence, both say this: a San Fran-based company, Rapleaf, has made a booming business of digital stalking. It tracks the online haunts of consumers on behalf of businesses like banks, lenders, and marketers, and compiles whatever data found–via tweets, Facebook updates, MySpace boards, whatever public digital trail one may have left behind–into behavioral profiles.

That alone should be alarming to anyone who has ever tweeted or status-updated in passing about an unwise purchase, looming medical bill, or tight funds. What makes this scarier is that they also track and compile data posted by your online network of acquaintances, reasoning that their choices will give insight into your behaviors, assuming like attracts like. This “behavioral tracking,” once turned over to a mortgage lender or credit card company, is designed ostensibly to help them better target and market to you, or at least that’s what the company’s founder asserts in the comments of the first article, and it’s what he is quoted as saying in the second. Just designed to make it easier for consumers to get approvals for credit and loans!

I call ENORMOUS. BULLSHIT.

Until I see a complete copy of Rapleaf’s standard contract for its business clients which, in impeccably crafted legalese, restricts use of the data compiled to marketing only, with severe penalties for transferring said data from the marketing department to risk assessment, I cannot believe these companies will not in turn use it as a sort of digital redlining.

Consider: many of us use our social networks to, you know, network. They often include people we don’t know well, or at all. But if those near-strangers are part of your public network, and display high-risk behaviors in their own networks, it could reflect poorly on you. Have a guy on your Mafia Wars Facebook friends list who frequently posts detrimental info in his own space, someone who also happens to be a client of the bank you’ve just approached about a small business loan? That bank, in possession of his credit info, which you may know nothing at all about, could use his irresponsibility or hard luck to profile you.

I don’t view this profiling as a casual threat, for a number of reasons. First, while it’s alleged to work to your benefit, we’re talking about companies that likely already have access to your credit history and financial records. That should be all they need to know about your suitability. While this profiling may help companies make marketing decisions, anyone who has ever read the fine print in a credit agreement should know these institutions generally give themselves license to use any scrap of information they find to pad their own balances, via interest rates and fees. Millions of Americans in this recession have already found that, should they hit hard times for a few months and prioritize rent over an outstanding store credit card, other creditors, even those that are still being paid on time, religiously, will raise interest rates to usurious levels, driving already strapped consumers further into debt. Second, while I can see these companies using your associates’ information to rate you more of a risk, I find it difficult to believe that anyone with a borderline financial history in a network of comfortable associates will be suddenly deemed less of a risk. And third, in a digital climate that is already showing evidence of segregation, it will encourage these segregated camps to become even more entrenched. If such profiling were to become common practice, there’s additional strong disincentive to associate with a professional, academic or social peer who may have similar interests, but an unknown or typically negatively stereotyped background.

I’m sure consumer protection groups will be watching this development closely, and if the practice does take off, odds are they’ll lobby for regulation. We can only hope. In the meantime, I’m glad I went the private route with most of my networks.