Digital Character in "The Scored Society": FICO, Social Networks, and the Competing Measurements of Creditworthimess

Chapter author: Tamara K. Nopper

Page author: Allie Diaz

Summary
Tamara Nopper opens her chapter with a provocative Wall Street Journal headline: “Bad Credit? Start Tweeting.” She explains that some marketplace lenders are now scanning social media to determine applicant risk, which may benefit applicants who are deemed credit unworthy by traditional credit scoring methods. Nopper produces the term “digital character” as a person’s digital profile, which marketplace lenders monitor and produce to make inferences regarding a person’s character and credibility. Nopper states that her chapter will examine the narrative of competition between traditional credit scoring and marketplace lending, and it will then evaluate the equitability of the “scientific” FICO score versus “subjective” social media assessment. She reveals that this chapter is only the beginning stage of a larger project that analyzes the role of digital character in a “scored society” (171).

Nopper defines credit scoring and provides a synoptic history of the concept, explaining how it is often “framed within a discourse of risk” (172). While credit scores generally award more points for factors that indicate a person is more likely to repay a debt, the statistical methods used and factors considered often differ between credit scoring companies, and the system has historically disadvantaged women and African American applicants. Nonetheless, credit scoring is widely regarded as an objective technology for keeping bias out of the risk assessment process. Nopper then introduces the FICO score, crafted by the Fair Isaac Corporation, as her primary example of the commodification of credit scores, with ten billion scores being sold per year.

The role of digital character is becoming especially significant to marketplace lenders, which are emerging companies that specialize in online lending and target people with low credit scores. This strategic exploitation of applicants’ digital presence directly challenges more traditional methods of data collection, namely the FICO score. Nopper lists several marketplace lenders who utilize information such as a person’s purchasing habits, number of Facebook friends, and even texting patterns to determine creditworthiness. She raises three primary issues with the tracking of digital social networks: 1) some people may not have social media profiles, 2) it is difficult to obtain consent, and 3) people may feel that they have to choose between their social connections and their credit score. Nopper states that while it is a controversial idea to base someone’s credit score off of their number of Facebook friends, it proves to be a profitable concept nonetheless.

As Fair Isaac competes with marketplace lenders who are ditching the FICO score, the company has been using transparency as a selling point. Nopper notes that Fair Isaac has falsely equated its use of scientific methods with being unbiased. While the FICO website explicitly states that age, gender, marital status, and race will not be considered in the calculation of one’s FICO score, the potential for discrimination by marketplace lenders calls for stricter regulation. While marketplace lenders cannot boast use of the same scientific practices behind the FICO score, they can still promote themselves as “socially innovative” while disguising predatory lending practices. They may market themselves as nondiscriminatory while socially punishing those with no or low credit scores. Nopper argues that even FICO’s scientific algorithms were designed by human beings with implicit biases and values. For all of these reasons, Nopper calls for a reconsideration of Regulation B of the Equal Credit Reporting Act.

Nopper concludes that while traditional credit scorers and marketplace lenders may compete financially, they share similar visions of a “scored society,” in which being scored in some way significantly shapes a person’s life chances. Both methods of risk assessment are inherently biased, and the legality of their methodologies should

Connection to other readings
I couldn’t think of the specific reading from class for this one, but it reminded me of when we discussed the right to be forgotten. It also reminded me of the Arrested Development episode (S4E3) where Lindsey and Tobias take out a predatory loan and end up living in an empty mansion that they can’t pay for.

Connection to other chapters
Racialized Surveillance in the Digital Service Economy: the concept of the "digital character" seems to fit in with the discussion of how both consumers and users are practicing surveillance in the digital service economy.