On Social Credit and the Right to Be Unnetworked

63 Pages Posted: 8 Feb 2016 Last revised: 29 Aug 2016

See all articles by Nizan Geslevich Packin

Nizan Geslevich Packin

City University of NY, Baruch College, Zicklin School of Business; City University of New York - Department of Law

Yafit Lev Aretz

City University of New York - Department of Law

Date Written: February 5, 2016

Abstract

Tell me who your friends are and I will tell you who you are. This ancient social philosophy is at the heart of a new financial technology system – social credit. In recent years, loosely regulated marketplace lenders have increasingly developed methods to rank individuals, including some traditionally considered unscored or credit-less. Specifically, some lenders built their score-generating algorithms around behavioral data gleaned from social media and social networking information, including the quantity and quality of social media presence, the identity and features of the applicant’s contacts, the applicant’s online social ties and interactions, the applicant’s contacts’ financial standing, the applicant’s personality attributes as extracted from her online footprints, and more.

This Article studies the potential consequences of social credit systems predicated on a simple transaction: authorized use of highly personal information in return for better interest rates. Following a detailed description of emerging social credit systems, the Article analyzes the inclination of rational and irrational customers to be socially active online and/or disclose all their online social-related information for financial ranking purposes. This examination includes, inter alia, consumers’ preferences as well as mistakes, gamesmanship, and consumers’ self-doxing or lack thereof. The Article then moves to discuss policy challenges triggered by social-based financial ranking that may become the new creditworthiness baseline criteria. It focuses on (i) direct privacy harms to loan seekers, and derivative privacy harm to loan seekers’ online contacts or followers, (ii) online social segregation potentially mirrored by offline social polarization, and (iii) due process violations derived from algorithmic decision-making and unsupervised machine learning. The Article concludes by making a significant normative contribution, introducing a limited “right to be un-networked,” to accommodate the welcomed aspects of social credit systems while mitigating many of their undesired consequences.

Suggested Citation

Packin, Nizan Geslevich and Lev Aretz, Yafit, On Social Credit and the Right to Be Unnetworked (February 5, 2016). Columbia Business Law Review 339 (2016). . Available at SSRN: https://ssrn.com/abstract=2728414 or http://dx.doi.org/10.2139/ssrn.2728414

Nizan Geslevich Packin (Contact Author)

City University of NY, Baruch College, Zicklin School of Business ( email )

One Bernard Baruch Way
New York, NY 10010
United States

City University of New York - Department of Law ( email )

New York, NY
United States

Yafit Lev Aretz

City University of New York - Department of Law ( email )

New York, NY
United States
9178891136 (Phone)

HOME PAGE: http://https://zicklin.baruch.cuny.edu/faculty-profile/yafit-lev-aretz/

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