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Takeaways:
- Facebook has patented new technology that could allow lenders to examine whether users are a good credit risk.
- The tech will weigh friends’ credit scores against yours when deciding whether to grant you a loan.
- The functionality would have to clear some regulatory hurdles, including equal credit opportunity legislation.
If you’ve ever had to “unfriend” someone on Facebook because they post too many political rants or endless Grumpy Cat memes, you may now have a more serious reason to restrict access to your social network: Earlier this week, Mark Zuckerberg and company patented technology that could allow mortgage lenders to cyberstalk your connections for evidence that you’re a good credit risk.
As if access to credit isn’t tight enough these days, U.S. Patent 9,100,400 could one day give lenders another creditworthiness assessment tool: the ability to weigh your friends’ credit scores against yours when deciding whether to grant you a mortgage loan.
The patent, granted to Facebook on Aug. 4, is actually intended to help Facebook users better filter out spam messages and offensive content, but it also gives “service providers” the ability to “examine an individual’s social network and a blacklist of persons who have been determined to be untrustworthy to determine whether to authorize transmission of content to that individual or authenticate that individual for access to information or service.”
In one function of the invention, the service provider is a lender, and the patent explains that “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.”
Facebook applied for the patent in 2012 after buying it in a bundle of patents from Friendster in 2010 for $40 million. So far, the company is not commenting on what it intends to do with the new technology — or if it will deploy it at all. Not all patent holders go on to convert their ideas into reality.
The functionality would also have to clear some regulatory hurdles, as there is a little federal law called the Equal Credit Opportunity Act that explicitly lays out the criteria that creditors can use when deciding whether to extend credit to a potential borrower.
For that reason, the patent is “nothing to lose sleep over,” said Greg McBride, chief financial analyst for Bankrate.com, but he said “it could potentially affect those who are borderline to begin with.”