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Employees trade in staggering amounts of data for “loans to payout”

By on March 23, 2022 0

Argyle CEO Shmulik Fishman says the company can train lenders on factors such as work consistency and growth trajectory. Does your professional title change upwards every six months? These are signs of a good worker and one worth looking back at, ”he says.

Reputation markers can reflect bias, however. Shannon Liss-Riordan, a lawyer who is suing Uber for an allegedly racially biased customer rating system, recently surveyed the drivers she represents. Of more than 4,000 respondents, 17.4 percent of white drivers said they had been deactivated due to a low rating, compared to 24.6 percent of Asian drivers, 24.1 percent of black drivers and 24.9 percent of those who labeled their race as “different” “. Only 16.9 percent of Latinx drivers answered yes, but the real figure is likely higher as several drivers identified as racing, such as Hispanic, under “Other”. “I find it shocking that customer service data would be used for other purposes that could affect drivers’ livelihoods, including access to loans or other benefits,” says Liss-Riordan. “This is a very dangerous precedent.”

When asked about the risk of bias perpetration, Fishman replies, “We are not concerned with discrimination. We also do not deal with, very importantly, creating criteria for selecting acceptance or rejection. “

Of course, not every payroll data company is so focused on reputation data. “We don’t do that,” says CEO Truv Kirill Klokov. “I just don’t find it helpful when applying for a loan to know your Uber rating. The primary use case is that you should be able to prove it in the absence of a FICO score [for an immigrant] just like me, i’m actually the person to pay you back your loan. Or I actually worked for a company where I claimed I worked. “

Although consumers have to consent to sharing their data, if they change their mind later, they may not be able to access the product and have provided their data anyway. And some financially distressed employees may feel they don’t have much choice. Michael Gray, an Iowa pest control specialist, regularly uses the cash advance app called Earnin to get down payments of up to $ 550. He agreed to have his GPS location monitored by Earnin to confirm he went to work. (Getting paid doesn’t use payroll data.) While he found it invasive, he complied with it. “In a way, they are holding you by the balls when they are dealing with your money and you are trying to scratch yourself.”

Despite borrowers’ difficult relationship with paid advances, the comfort is difficult to resist. “If I need $ 100 for my bill, shopping or whatever, it’s right there,” says Gray. “It’s quick. It’s just a few clicks. So it kept me pretty effectively in their ecosystem. ” She adds, “I really want to leave.”

All consumer and employee ombudsmen seem to agree that the proliferation of these financial products is symptomatic of a deeper problem: insufficient wages. Employer-sponsored access to wages “essentially allows workers to be paid as little wage as possible because bad hiring practices can be fostered,” said David Seligman, executive director of Towards Justice, a law firm that represents employees.

“What we need most is higher wages, better tax programs, more support for low-income families, and tax relief for children,” says Levy. “But aside from that, the reality is that many people live paycheck to paycheck. They will need a loan from time to time to make ends meet.

Updated 3/23/22, 18:45 EDT: An earlier version of this story said that “Buy Now, Pay Later” products and Withdrawal Advances are not subject to credit law. Regulators examine whether they are subject to these rules.

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