Chances are, when you were young someone told you to watch out for the type of people you associate with, that people are often judged by the company they keep. This may now be truer than ever, because of an unprecedented new trend among consumer lenders to evaluate a person’s credit-worthiness by who they are friends with on Facebook.
While spending all day on Facebook or Twitter can indicate a lack of anything better to do, some companies like LendUp see an “active” social media lifestyle as a sign of stability. However, if seeking a loan from Lenddo, an applicant be denied if they are connected to a person who was late repaying a loan to the company. Many experts believe that it is not long before larger commercial lenders employ this practice.
For some time employers have been researching their potential hires on Facebook. What they are looking for is never clearly defined, but anecdotal stories exist of folks losing job opportunities because of the content of their posts or pictures both sexually suggestive or showing alcohol and drug use. Yet, some would even go so far as to request a potential employee’s user name and password for the social media site. Although, six states passed legislation protecting a person’s right to hold on to their password, mostly because of the private communications therein, anything publicly posted is still fair game.
Critics say that this both violates a person’s privacy and is a discriminatory practice. Still, these companies –mostly online lenders—exist in “a regulatory ‘wild west’” there’s no law requiring them to disclose even if a customer was turned down because of social media. If they are rejected from something on a credit report, it must be disclosed and consumer advocates say that should apply in this situation.