For the past two years, financial bloggers have been writing about a small company based in New York that provides loans to people in Columbia and the Philippines. It’s remarkable, considering that most of these bloggers live in countries in which the financial company isn’t even offering a product. But this company is doing something really innovative: It’s using social media monitoring in order to determine a user’s credit scores. This could signal a huge change in the way reputation management, and social media cleanup, works in the future. Here’s what’s happening.
The Impact of Friends
Traditionally, banks rely on a few key indicators in order to measure a person’s creditworthiness. The amount of money a person makes, the amount of money a person owes, and the person’s prior history of attending to financial obligations were the three key points banks took into consideration when choosing to give or withhold money to a needy person.
A company like Lenddo, on the other hand, computes credit scores based on social media factors. The theory is that people who socialize together tend to have the same income and spending habits, so finding people who have friends who are trustworthy means finding people who are likely to pay back their loans on time.
In order to determine this social credit score, Lenddo asks applicants to provide information regarding their social media accounts, such as their screen names on:
The higher the social media presence, and the more high-quality friends a person has, the higher score the person might receive. In addition, applicants are also asked to designate a few choice people as their “Trusted Connections.” Linking up with people who have already borrowed from Lenddo and paid back the loans on time is just one way to game the system and ensure that the loan is approved.
Broader Applications for Reputation Management
On the surface, it seems unnecessary to understand how a small bank works. After all, few Americans or Europeans will travel to the Philippines just to take out a loan, and those who do might choose to work with a reputable bank rather than an online startup. But for those of us who work in reputation management, this is a bit of an alarming trend.
Typically, when clients ask for help with reputation management, experts look at the actions that person has performed online. Snarky news articles, raunchy blog posts, nasty photographs, and unfortunate press releases are typically the focus of the effort, and SEO techniques are used to either remove these offensive items or drive them down in search results.
However, if the online industry as a whole is moving toward a more comprehensive view of a person’s reputation, this traditional technique may not be effective. Specifically, if a person’s reputation is dependent, in part, on the other people a person knows, comprehensive reputation management might mean digging into the details of the connections a person makes in the online world.
At this point, ethics become a little sketchy. While clients might provide permission for technicians to delve into their lives and amend details that aren’t quite ready for prime time, random friends may not appreciate the added attention. It might also be difficult to determine how trustworthy or helpful a friend is without really digging too deep into that person’s life and crossing privacy lines.
Additionally, people with reputation difficulties might be astonished to find out how long such a cleanup might take, and the costs might be far too extensive for them to bear. People with hundreds of connections might need hundreds of hours of help, and that could be prohibitive for some.
As mentioned, there doesn’t seem to be a need for widespread panic at this point. The company providing this service only operates in a few choice countries, and the methods they use may never catch on in the wider world.
However, anyone who works with reputation issues should keep in mind that client connections may very well play a role in cleanup efforts in the future. It’s a message we can, and should, be sharing widely, so our customers can make good choices now.
And we can also lead by example, by ensuring that our own social media connections are with real people we’ve met in real time in a real place. We should also feel free to break ties with people who are acting up (and acting out) in ways that might cast us in an unfavorable light. Just keeping tabs, and ensuring that our friends make us look good, could help us prepare to the next wave of social media monitoring that sites like Lenddo seem to be ushering in.
How might you monitor your social media connections in the face of this news? Or do you think no action is required at all? I’d love to hear your thoughts in the comments section.