Remember when you were a kid and your parents warned, “People judge you by the company you keep?” That’s even more true in the Internet era. Now, even banks might start judging you—or at least your worthiness for a loan—based on your social media connections.
A Hong Kong-based microlender called Lenddo, which currently operates in the Philippines but plans to open a division in the Americas, uses Facebook, Twitter, and other social-media connections to judge the creditworthiness of potential borrowers.
Adrienne Jeffries, writing for the New York Observer’s Betabeat blog, logged in via Facebook, Google, and other services. She scored 470 points according to Lenddo’s criteria, but could not apply for a loan because “you need at least 3 connections with scores above 400 in your Lenddo trusted network.”
I haven’t logged in myself, but my own Facebook friends run the gamut from “established professionals much richer than me” to “currently unemployed people” and “recent grads with heavy student debt.” Would I be considered more creditworthy based on my older, richer friends, or less worthy based on the younger, poorer ones? Lenddo’s exact algorithms remain a secret, but it looks like the financially clever thing to do would be to kick my poor friends to the virtual curb.
Should you qualify for a Lenddo loan and not pay it back on time, Lenddo will make sure all your online friends know about it and are punished for it too. Oh, and they’ll hear about it, since you’ve given Lenddo permission to post through your social-media accounts, according to Lenddo’s terms of service:
“Failure to repay will negatively impact your Lenddo score, as well as the score of your Lenddo friends. Lenddo MAINTAINS THE RIGHT TO NOTIFY YOUR FRIENDS, FAMILY AND COMMUNITY if the borrower fails to repay, however, this is only done after several notifications to the borrower and an attempt to work out a payment plan.”
That said, Lenddo’s website also assures borrowers that “Lenddo believes in following the highest standards of ethics within all of our relationships. We believe that every relationship we have is a partnership. Partnerships are characterized by mutual dignity and respect.”
So far, Lenddo hasn’t generated much response in the Twitterverse. A search for “Lenddo” shows several identically worded Tweets from people saying “I just joined Lenddo, the world's first reputation scoring service that uses online social network to assess credit.”
Many of those Tweets are from brand-new Twitter accounts with only that one Lenddo-created post. One reasonable theory: These accounts were opened so their holders could qualify for a Lenddo loan, and Lenddo’s app auto-posted the Tweets (one of the advantages to demanding access to borrowers’ Twitter accounts).
The few tweets not generated by Lenddo mostly viewed the idea with a jaundiced eye.
TeamCymru asked, “Lenddo=1st credit scoring service that use social networks to assess credit, what could go wrong?”
Dheerajprasad took a more positive view of the matter: “Now you can negotiate a lower rate of interest on the basis of your social reputation!”
There were also helpful-hints articles tweeted by Lenddo’s own account. One story, called “Celebrating the holidays on a budget,” suggested people focus on family-related activities like decorating the home together or reading Christmas stories to their kids, and concluded “Whatever you plan to do, the most important thing is you make sure you spend quality time with your family. Your children will look back and remember the time you spent with them, not the money you spent on them.”
One might point out that children seem like a poor credit risk, not to mention having absurdly small Twitter followings. Of course, banks have issued credit cards to dogs and babies. So if your kid has a high enough Klout score, it’s only a matter of time before they get a microloan, too.
Photo by rinkjustice