US Patent Filed for Social Credit Scoring Platform

March 15, 2021

(WP) Fido, the digital credit scoring company that created the first European platform to rate the quality of digital consumers through their digital footprints has now filed a nonprovisional patent application with the US Patent and Trademark Office to do the same here in the US.

Conventional credit scoring methods consider income, employment, timely payment of bills, debt to credit ratios, and even credit references. Generations of people have been taught to manage their personal creditworthiness according to these metrics.

According to a press release issued by the company last Wednesday, have two problems. First, hard information tends to be "procyclical": it boosts credit expansion in good times but exacerbates contraction during downturns. The second and more complex problem is that certain kinds of people, like new young adults, immigrants and unbanked might not have enough hard data available.

Fido resolves the dilemma by tapping hundreds of digital footprints: the type of browser and hardware used to access the internet, cell phone data, the email address used and much more. The company claims recent research supports the notion that, once powered by artificial intelligence and machine learning, these alternative data sources are often superior to traditional credit assessment methods.

"The filing of this patent application validates our intention to create innovative credit scoring solutions that are designed to increase the acceptance rate, reduce defaults and advance financial inclusion with the use of soft data powered by artificial intelligence," said Fido CEO and Chairman Marko Maras.

It remains unclear how details like the type of browser used or one’s email address can predict non-payment probability. The mere idea raises a host of new privacy concerns. However, such a tradeoff may prove quite useful, even necessary, for individuals new to the economy and lacking in the type of history traditionally used to assess them.

For example, the Chinese social credit scoring system uses personal behaviors and habits to help determine a citizen’s trustworthiness. A host of information is easily collected, largely through surveillance systems and the help of facial recognition technology. Behaviors like running a stop sign, jaywalking, or littering are no longer anonymous infractions. Not paying fines, not appearing in court, misbehaving on a date – all of these and more will count against you. Conversely, donating to a charity, befriending a member of a racial minority, or purchasing environmentally friendly cleaning products could help increase your score.

In some ways, the social credit concept is already immersed in our way of life. We often read reviews before purchasing products on sites like Amazon, or before booking vacations (Tripadvisor), trying new restaurants, or even considering a job change (Glassdoor). Yelp provides reviews and recommendations for everything from doctors and dentists to beauty salons and plumbers. Ebay asks for ratings on its buyers and sellers both. Walmart asks online grocery customers to rate their experiences with its delivery drivers.

Fido insists that its proprietary tracking system collects information “in full respect of privacy.” The company recommends its consumer credit profiles for credit reporting agencies, digital retailers, and even small start-ups.

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