Facebook has gained yet another way to put users’ personal data to work. The social media giant obtained an updated patent on Tuesday that will allow lenders to analyze borrowers’ social connections and offer or deny loans accordingly. The patent is a rare insight into the many ways Facebook can monetize user data and was first identified by SmartUp Legal.
The patent describes other user tracking as well, which would help prevent users from sending spam to others with whom they are not legitimately connected. This kind of tracking would help give users a better experience when using Facebook by limiting spam. However, the patent also describes another use, in which banks and other lenders could view the credit scores of a potential borrower’s social network connections and approve or deny the loan based on what they saw.
“When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes,” the patent explains. “If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.”
The prospect of being evaluated based on your friends’ credit is a little scary — just because one of your old Facebook friends from high school has wracked up massive debt doesn’t mean you have. However, the Federal Trade Commission bans discrimination based on a borrower’s gender, age, race, religion, or other personal characteristics, putting the patent in a legal gray area.
Lenders are typically only supposed to consider a potential borrower’s credit history and other financial information, and it’s unclear whether the FTC would allow lenders to evaluate the financial information of your friends when assessing you for a loan.
As Quartz points out, tech companies snap up patents constantly, often without the intention to actually use them. The patent is one of several purchased from Friendster in 2012, and Facebook may not plan to actually use the credit history analysis portion of this particular patent.