Argyle CEO Shmulik Fishman says the company can coach lenders on factors such as work consistency and upward trajectory. “Does your job title change upwards every six months? These are signs of a good worker and one you may want to look at again,” he says.
However, reputation markers can reflect bias. Shannon Liss-Riordan, a lawyer who is suing Uber for its allegedly racially biased customer rating system, recently questioned the drivers she represents. Of the more than 4,000 respondents, 17.4 percent of white drivers said they were deactivated because of 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 ‘Other’. Only 16.9 percent of Latinx drivers answered in the affirmative, but the actual number is likely higher because several drivers identified themselves as races like Hispanic under ‘Other’. “I find it shocking that customer service data is being used for other purposes that could impact drivers’ livelihoods, including access to loans or other benefits,” said Liss-Riordan. “That’s a very dangerous precedent.”
When asked about the risk of perpetuating bias, Fishman says, “We’re not in the discrimination industry. And we’re also, very importantly, not creating criteria for approval or rejection choices.”
Certainly, not every payroll data company is equally focused on reputation data. “We don’t do that,” said Truv CEO Kirill Klokov. “I just don’t think it’s helpful when you apply for a loan to know your star rating on Uber. The primary use case is that you must be able to prove that, in the absence of a FICO score [for an immigrant] like me i am actually someone who pays you back the loan. Or I have worked for a company that I claim to have worked for.”
While consumers must give permission to share their data, if they later change their mind, they could lose access to a product and still have their data transferred. And some employees who are in financial trouble may feel they have little choice. Michael Gray, a pest control specialist based in Iowa, regularly uses the Earnin For Advances app for advances up to $550. He agreed to have his GPS location checked by Earnin to confirm he was on the job. (Earnin doesn’t use payroll data.) Though he found it invasive, it complied. “They kind of have you by the balls when they’re dealing with your money and you try to come over.”
Despite borrowers’ uneasy relationship with prepayment products, the convenience can be hard to resist. “If I need $100 for a bill or my groceries or whatever, it’s there,” Gray says. “It’s fast. It’s a few clicks. So keeping me in their ecosystem has been pretty effective.” He adds, “I really want to be out.”
What consumer and worker advocates all seem to agree on is that the proliferation of these financial products is the symptom of a deeper problem: insufficient wages. Employer-sponsored access to earned wages “you can basically get away with paying your employees as little as possible because you can support poor employment practices,” said David Seligman, executive director of Towards Justice, a not-for-profit law firm that represents employees. .
“What we need most are higher wages, better tax programs, more support for low-income families, and tax relief for children,” Levy says. “But other than that, the reality is that we have a lot of people living paycheck to paycheck. They will occasionally need credit to make ends meet.”
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