Prohibits a consumer reporting agency or lender from using certain information to determine an individual's credit worthiness

Title of bill

An act to amend the general business law and the banking law, in relation to prohibiting a consumer reporting agency or lender from using certain information to determine an individual's credit worthiness

Purpose or general idea of the bill

Prohibits a consumer reporting agency or lender from using the membership of the consumer's social network information to determine an individual's credit worthiness

Summary of specific provisions

Section 1. Section 380-a of the general business law is amended by adding a new subdivision (u) to read as follows:

(u) Members of a consumer's social network: a group of individuals authorized by a consumer to be part of his or her social media network.

Section 2. Section 380-j of the general business law is amended by adding a new subdivision (h) to read as follows:

(h)No consumer reporting agency shall collect, evaluate, report, or maintain in the file on a consumer the consumer's use of internet or web browsing history as a factor to determine the consumer's credit score, standing or credit capacity.

Section 3. Section 2 of the banking law is amended by adding a new subdivision 30 to read as follows: Members of a borrower's social network: a group of individuals authorized by a borrower to be part of his or her social media network.

Section 4. Section 352 of the banking law is amended by adding a new sixth undesignated paragraph to read as follows:

No licensee shall collect, evaluate, report or maintain in the file on a borrower, the borrower's use of internet or internet viewing history as a factor to determine the borrower's credit worthiness, credit standing or credit capacity.

Section 5 contains the effective date.

Justification

Consumers in the United States continue to be under attack by the fuzzy math used to calculate credit scores. The US General Accounting Office has estimated that some 75% of credit scores are wrong based on incorrect information collected by credit bureaus and attached to individual credit scores.

As if this was not detrimental enough to the average consumer, credit scores are used by employers to screen potential employees, by landlords and even by graduate schools for students applying to business majors. The errors on these reports and the fuzzy math used to create the credit score are impacting every aspect of our lives.

To make matters worse, the FICO score, a measure of consumer credit risk, which has become a fixture of consumer lending in the United States, is moving to add consumer's social network as another variable in the more than 100 variable equation used to compute a consumer's credit score.

FICO is looking to lumping all of the individual consumers' social network members credit scores and taking that average into account as a variable to derive a new credit score for individual consumers. This is an obvious invasion of privacy and another fuzzy math approach to hurt consumers.

It is obvious that individuals in low income communities will have a social network of similar individuals based on geography only. So why should low income consumers be further stigmatized and penalized via worsening credit scores. FICO's attempt to do this should be banned and this legislation does exactly that.

Prior legislative history

No prior legislative history.

Fiscal implications for state and local government

None

Effective date

Immediately.