Loan Pricing

Banks and loan agencies can not put down social media as a reason why they are denying someone a loan. However, many banks are using social media sites such as Facebook as a way to double-check customers before making credit decisions. The Fair Credit Reporting Act regulates these processes to make sure customers are getting equal treatment.Collection agencies are even beginning to use social media as a way to track people down when they have not made credit card payments etc. This idea is not new, and is actually similar to how eBay allows its customers to rank each other. The American Banker claims that Prosper Marketplace Inc. is the eBay of peer-peer lending. The simplest aspect of this is how Lenders, banks, etc. just take the information on you that they already have (your name for example), and type it into social media sites, including Monster and LinkedIn, to verify contact information. They also check sites such as Twitter to make sure you aren’t lying about important factual information, like your employment. Some companies such as PersonalLoanOffers conversely “condemn” the new use of social media to pry into people’s lives for the sake of loans and pricing according to this article by Tim Grant. However, major credit scoring companies such as Fair Isaac are discussing the possibility of beginning to use social media while businesses like Moverncorp Inc. are offering customers a chance to check their financial-behavior based on their own social media activity. Since social media is new for many businesses, especially in the banking industry, it is hard for these companies to get on board with this trend. Many worry about violating regulations.

 

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4 thoughts on “Loan Pricing

  1. Wow, I had no idea banks were beginning to do this! I am not sure how I feel about it. I do think it is a young adults responsibility to keep their social media cleaned up and presentable, but this sounds a little crazy. There are more traditional ways for banks to check all your information to be true and I think they should stick to those. It is already so difficult to begin building credit as a young adult that I would hate to see it become even more difficult because of social media. I am almost disappointed to hear that banks would be using social media advancements in a negative way, which is how these ideas came off to me. Very interesting though; I will definitely want to watch for this in the future.

  2. Did you find any examples of banks getting in trouble with legal allegations for being to invasive into a person’s life on social media? I think this is a very interesting topic because it meets an ethical dilemma in a sense. People want to be able to post what they want on social media and sometimes people post comments without thinking of your banking history. Do all banks check your Facebook and Twitter accounts as their primary source for a background check, or do they only resort to social media when they become skeptical of something filed on a tax claim? I would like to do some more research on this because it is just another aspect of life that we are reminded of being monitored on the web.

  3. Stephanie Gross says:

    This is an in extremely interesting blog post; even the first sentence took me by surprise. I never knew that banks were doing this, but I guess if they have the tools that’s a way that social media can work in their favor. It also can serve as a reminder to users of social media that they should be conscious of what they post. Whenever we talk about transparency for brands in class I always think about how I feel about the level of transparency my friends use on twitter and think they’re a little too comfortable. However, using something like this against them seems unethical to me.

  4. This is interesting….I did not know these companies could use social media sites to track down people. I think it could be an invasion of privacy, but sometimes with social media and companies, privacy can be wishy-washy. It is up to them to handle it in a certain way.

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