A German credit agency is planning to analyze the creditworthiness of individuals by using information gathered from online sources such as Facebook and other social networking sites.
Schufa, Germany's largest credit agency intends to assess people's ability to make repayments by using "crawling techniques," such as those used by Google, for the purpose of "identifying and assessing the prospects and threats." A spokesman for Schufa told Spiegel Online that "everything is happening within the legal frameworks in Germany."
Nevertheless, the proposal raises serious concerns over assessing a person's reputation from information found on the web. Schufa is planning to analyze automatically recorded information on the Internet such as on social networks, and this can then be linked to the stored data gathered by the credit agency. Although Facebook pointed out that according to its terms and conditions, automatic registration of members was actually not permissible.
For a country with some of the strictest privacy laws in Europe, it is no surprise that the proposal has come under a strong criticism. Analyzing data related to personal relationships which can be found on Facebook and Twitter in order to judge a person's creditworthiness is a severe invasion of privacy.
Since the German broadcaster NDR reported on the research project last Thursday there has been a public outcry. Numerous privacy advocates and politicians have strongly criticized the proposal.
Sabine Leutheusser-Schnarrenberger, the German Justice Minister, was quick to condemn the credit agency's plans. She told the Spiegel that Facebook "friends and preferences" should not prevent an individual from, for example, being able to obtain a mobile phone contract. Leutheusser-Schnarrenberger stated "Schufa and other credit agencies should disclose their full intentions of using Facebook data to check creditworthiness." She said that the data used to determine someone's credit report is already controversial and called for the process to be made "fully transparent."
On Thursday, the Justice Minister was joined by Consumer Protection Minister Ilse Aigner in warning Schufa and HPI about tracing individuals on social networks, and requested further information on the research plans. Rainer Brüderle a parliamentary member of the Free Democrats (FDP) stated that "Schufa's plans go too far... social networks, like a circle of friends, are part of a person's private life, and should therefore not be tapped."
However, the Hasso Plattner Institute (HPI) which was to be commissioned by Schufa to develop a proposal for the project, has now pulled out due to mounting criticism from politicians and privacy advocates. The privately-funded information technology institute was going to explore the extent to which information from the Internet can help in evaluating the creditworthiness of individuals. HPI announced that it has withdrawn from the contract with Schufa.
In a statement, the institute claimed there had been some "misconceptions" by the general public about their research approach. HPI Director Christoph Meinel stated that the project could no longer be carried out with the ease and in the "unburdened" conditions necessary.
The move by HPI, a clear blow for Schufa, has been welcomed by critics of the proposal, but it is unclear whether the credit agency intends to pursue the project regardless. The proposal could be hugely damaging to the privacy of individuals, linking their private relationships and their online reputation to their creditworthiness seems hugely invasive. Schufa's plans could have detrimental effects on a person's everyday life and further highlight the dangers of disclosing personal information on the internet. It is unclear whether Germany, a country with some of the most sophisticated privacy laws in the world would be able to justify such actions in accordance with its legal framework.