Lenders may eye smartphone use before giving you a loan

Discussion in 'privacy general' started by ronjor, Dec 4, 2015.

  1. ronjor

    ronjor Global Moderator

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  2. mirimir

    mirimir Registered Member

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    Indeed. But hey, this is a quid pro quo for borrowing money. So it's distinguishable from un-targeted NSA snooping and such. It's still creepy, however :eek:
     
  3. driekus

    driekus Registered Member

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  4. hawki

    hawki Registered Member

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    This is one of the most ridiculous ideas I have heard of recently. There could be a hundred other reason why someone charges their phone a lot. This could very well violate The Fair Credit Reporting Act. Two years ago Telecheck had to pay a huge fine in a case filed against it by the Federal Trade Commission because they were using a faulty risk assessment algorithm. The rationale here sounds faulty to me.

    What kind of world has technology and tracking brought us. Being denied a loan cuz you charge your phone a lot . OMG.

    Sounds like a lot of hype by a tech start-up. You will never see it in the USA.
     
  5. driekus

    driekus Registered Member

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    So what you are saying is that it is illegal because the algorithm is faulty?

    I personally dont think the idea is implausible, but I think they are gleaning far more insight than the age of the phone from the data. If they get battery usage and data usage they can probably infer what apps are being used and how frequently. If you use tinder you would have a different profile to somebody that uses kijiji.

    This is more likely to happen in the high risk pay day lender area than mortgage lending in the US and the UK.

    My personal opinion is that they are using many algorithms that have questionable legality but that are highly effective. They are probably using these methods with boarderline legal justification and are relying on the fact that the method is secret.
     
  6. deBoetie

    deBoetie Registered Member

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    This is one of the main assault on the rule of law that is going on right now, with an asymmetric position being roundly abused by governments and corporations. The "borderline" is more like shyster lawyers poaching up a secret ruling without challenge in open court, or any court for that matter, knowing that regardless, the worst that can happen is a mild financial penalty, but more likely immunity. The scope for abuse of data (with all its imperfections in databases - especially if they do not bear the costs of rubbish data) - is all too clear.

    I'm wondering what the credit position of a Luddite who refuses to have a smartphone might be!
     
  7. mirimir

    mirimir Registered Member

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    From what I've read, this is about people who aren't qualified for consumer credit. Maybe they've been late with payments, or defaulted, or whatever. If they don't have smartphones, they probably won't get credit. For people with good credit, having smartphones probably doesn't matter.
     
  8. Nebulus

    Nebulus Registered Member

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    Maybe they should roll a dice and give people a loan based on a score derived from that. Why not make that a part of "science of credit risk analytics" as well? :rolleyes:
     
  9. driekus

    driekus Registered Member

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    The compounding factor here is at least in the US what the impact of CISA will be. It is unclear how the immunity will be used by corporations to protect them from misuse of personal data.

    @Nebulus: You underestimate the value of the data. It is far more than just a dice roll. The profits are also significant if you get it right. Lending at high rates can be very profitable if you are able to derisk the transaction.
     
  10. mirimir

    mirimir Registered Member

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    That was the logic behind subprime mortgages. That didn't work out so well :eek:
     
  11. driekus

    driekus Registered Member

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    Completely separate issue. They knew at the time they made the loans that they were high risk, it was just how the sold the loans that caused the problems.

    Besides it did not work out too badly financial (for the companies). The financial firms made the loans, cashed out and then got a government bailout to cover the losses. Now they are back to making billions.
     
  12. mirimir

    mirimir Registered Member

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    @driekus

    Yes, there were two issues: bad loans, and derivatives that hid them. But still, from what I've read about this issue, it's the banks' desperation that's driving this. The middle class is nervous about going further into debt, so they need new suckers.
     
  13. deBoetie

    deBoetie Registered Member

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    It's my opinion that there is exactly the same bubble going on with the selling of data. The reality is that the data is often poor quality (subprime), and worse, it is being resold multiple times - the same asset. Just as with CDS and other derivatives. Of course, it will take awhile for people to realise they''ve gone off the edge of the cliff and doing the cartoon running thing.

    @driekus - seems to me the inescapable logic of CISA is to share pretty much everything you can, because that lets you off the hook. If a corporation said, none of your business Mr. Government, we are managing ourselves, that leaves them open to the liability.
     
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