Argyle CEO Shmulik Fishman says the company can coach lenders on factors such as consistency of work and upside. “Does your job title change upwards every six months? These are signs of a good worker and one that might give you another look,” he says.
However, reputation markers can reflect prejudice. Shannon Liss-Riordan, a lawyer suing Uber over its allegedly racially biased customer rating system, recently interviewed the drivers she represents. Out of more than 4,000 respondents, 17.4 percent of white drivers said they were disabled due to a low rating, versus 24.6 percent of Asian drivers, 24.1 percent of black drivers and 24.9 percent of those who chose their race marked as “Other”. Only 16.9 percent of Latinx drivers answered yes, but the actual number is likely higher as several drivers self-identified as races such as Hispanic under “Other.” “It shocks me that customer service data is being used for other purposes that could affect drivers’ livelihoods, including accessing credit or other benefits,” says Liss-Riordan. “It sets a very dangerous precedent.”
When asked about the risk of perpetuating prejudice, Fishman says, “We’re not in the discrimination business. And also, very importantly, we are not in the business of creating criteria for selecting approvals or denials.”
Of course, not every payroll data company focuses so much on reputation data. “We don’t do that,” says Kirill Klokov, CEO of Truv. “I just don’t find it helpful to know your Uber star rating when applying for a loan. The primary use case is that you should be able to demonstrate this without a FICO score [for an immigrant] Like me, I am actually a person who will pay you back the loan. Or I actually worked at a company that I claim I worked at.”
While consumers must agree to the sharing of their information, if they later change their mind, they may lose access to a product and still have submitted their information. And some workers in financial distress may feel they have no choice. Michael Gray, an Iowa pest control specialist, regularly uses a cash advance app called Earnin for advances of up to $550. He agreed to have Earnin monitor his GPS location to confirm he was going to work. (Earnin doesn’t use salary data.) Though he found it intrusive, he stuck to it. “They kind of caught you by the balls when it comes to your money and you’re trying to get by.”
Despite borrowers’ difficult relationship with pay-advance products, the convenience can be difficult to resist. “If I need $100 for a bill or my groceries or whatever, it’s right there,” says Gray. “It’s fast. It’s a few clicks. So it’s been pretty effective to keep me in their ecosystem.” He adds, “I really want to be outside.”
Consumer and labor representatives all seem to agree that the proliferation of these financial products is a symptom of a deeper problem: underpayment. Employer-funded access to earned wages “essentially allows you to pay your workers as little as possible because you can shore up bad employment practices,” says David Seligman, executive director of Towards Justice, a nonprofit law firm that represents workers.
“What we need most are higher wages, better tax programs, more support for low-income families and a tax break for children,” says Levy. “But that aside, the reality is we have a lot of people living paycheck to paycheck. They will occasionally need credit to make ends meet.”
Updated 3/23/22 6:45 PM EDT: A previous version of this story stated that Buy It Now Pay Later and prepaid salaries products are not subject to credit laws. The regulators check whether they are subject to these laws or not.
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