Argyle CEO Shmulik Fishman says the company can coach lenders based on factors like job consistency and upward trajectory. “Does your job title change upward every six months? These are signs of a good worker and one that you might want to reconsider,” he says.
However, reputation markers may reflect bias. Shannon Liss-Riordan, an attorney who is suing Uber over its alleged racially biased customer star rating system, recently surveyed the drivers she represents. Of the more than 4,000 respondents, 17.4% of white drivers said they’ve had an outage due to low ratings, compared with 24.6% of Asian drivers, 24.1% of leather drivers black and 24.9% of people marked their race as “Other”. Only 16.9 percent of Latinx drivers responded in the affirmative, but the real number may be higher as some drivers identify themselves as racial, such as Hispanic in “Other”. Liss-Riordan said: “It is shocking to me that customer service data will be used for other purposes that could affect a driver’s livelihood, including their ability to access loans or other benefits. “It’s a very dangerous precedent.”
When asked about the risk of perpetuating bias, Fishman said, “We are not in the business of discrimination. And we are also, very importantly, not in the business of creating criteria for approving or rejecting selections. “
To be sure, not all payroll data companies focus on reputation data. “We don’t do that,” said Truv CEO Kirill Klokov. “I just don’t find it helpful when you apply for a loan to know your star rating on Uber. The main use case is that you can demonstrate that, in the absence of a FICO score [for an immigrant] like me, i’m really someone who will pay you back the loan. Or I actually worked at a company that I claimed to have worked for. ”
While consumers must agree to share their data, if they change their mind later, they could lose access to a product and have their data transferred anyway. And some workers struggling financially may feel they have little choice. Michael Gray, an Iowa pest control specialist, regularly uses a cash app called Earnin for advances of up to $550. He agreed to have Earnin monitor his GPS location to confirm he was at work. (Earnin did not use payroll data.) Although he found it intrusive, he complied. “They knocked you out with the ball when they were dealing with your money and you’re trying to get it.”
Despite borrowers’ uneasy relationship with advance products, convenience can be hard to resist. “If I need $100 for a bill or groceries or whatever, it’s right there,” says Gray. “It was quick. It’s a few clicks. So it’s pretty effective in keeping me in their ecosystem. ” He added, “I really want to be out.”
What consumer and worker advocates seem to agree on is that the proliferation of these financial products is indicative of a deeper problem: insufficient pay. David Seligman, chief executive officer of Towards Justice, a nonprofit law firm that represents workers, said:
“What we need most is higher wages, better tax programs, more support for low-income families, and a tax credit for children,” says Levy. “But in short, the reality is that we have a lot of people living on wages. Sometimes they will need credit to make ends meet. “
Update 23-23-22, 6:45 p.m. EDT: Previous versions of this story indicated that pre-paid post-paid and check-paid products are not covered by lending laws. Regulators are checking to see if they are following these laws.
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