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Facebook has been granted an updated patent from the U.S. Patent office on a technology that can help lenders discriminate against certain borrowers based on the borrower’s social network connections.
The patent describes a technology that tracks the way users are connected in a network. The main use case is for preventing members of a network from sending spam to other members with who they’re not directly or legitimately connected. Other use cases involve preventing network members from receiving emails from, or showing up in the search results of, people with whom they have no direct or legitimate connection.
But the technology can also aid in other types of discrimination. Here’s the last use case Facebook describes in the patent:
In a fourth embodiment of the invention, the service provider is a lender. When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. 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 use of social network contacts as a basis for establishing credit worthiness is questionable; just because some of my friends have bad credit scores doesn’t mean I do. But the technology would likely be valued by some banks to add a new metric to the review process.
Such technology could be harmful for the estimated 51 million Americans who have limited or no access to banking services, and could make them more prone to using alternative predatory systems such as payday loans.
Facebook bought the patent from Friendster in 2010. The inventor, Christopher Lunt, now works at getinsured.com, a website that offers tools to help people enroll in health insurance plans.
Research provided by legal technology firm SmartUp Legal.
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