Why your Facebook profile could stop you getting a mortgage

Daily Mail

Mobile phone giants and banks are using private companies to root through customers’ social media profiles before issuing contracts and loans.

A major Money Mail investigation found that firms are using data from Facebook and other social media websites such as Instagram, LinkedIn and Twitter to find out about customers’ spending habits and earnings as well as to confirm their age, address and employment.  

Insurers and even the taxman also rely on this data to make life-changing decisions about our finances.

Our investigation also found:

• Mortgage lenders are turning down applications because of how borrowers describe their job on LinkedIn.
• Insurers are using information on customers’ social media profiles to refuse claims.
• Tax investigators are grilling workers about their earnings after trawling through photographs online.
• Some car insurance deals are only available to drivers who agree to receive quotes via Facebook.

The findings come as Facebook battles to salvage its reputation after 50 million users had their personal data harvested without their knowledge or permission.

There is no suggestion that any firm named in our investigation has broken any rules or laws, or has misused data.

Dr Tom Fisher, researcher at campaign organisation Privacy International, says: ‘The financial sector is exploiting social media to learn about your habits, personality, political beliefs and more.

‘They are using companies, many of whom you’ve never heard of, to analyse this data and judge your credit worthiness and other attributes.’

App reads emails for shop receipts

One of the most startling findings from our investigation was the emergence of a new breed of credit scoring companies that rely on social media to help banks, mobile phone giants and even car finance companies make lending decisions.

Ordinarily, a firm would use your credit score to determine how much risk you pose as a borrower. The higher your score, the more likely you’ll be accepted for a loan or credit card.

Traditional credit reference firms such as Experian and Equifax calculate this by looking at how many credit cards and bank accounts you have, if you pay your bills on time and whether you’re on the electoral roll.

But newer companies claim they can use social media to verify someone’s identity and predict whether they will be a good borrower.

Friendlyscore claims to work with banks, car finance companies and mobile phone firms, including Carphone Warehouse’s iD Mobile.

It says it can build a picture of your financial health by analysing anything from social media and emails to mobile phone activity.

Crucially, you have to agree to let the company access these accounts by setting up an account online or downloading the mobile app.

Then you can choose which accounts the company can access. If you select Twitter, for example, it will build a picture of your interests by looking at who your followers are and what you write in direct messages.

If you have Gmail, it can monitor your emails to get an idea of how you spend your money via receipts for online shopping, or tickets for events or flights.

From LinkedIn, it can check you haven’t lied about your education and employment history.

If you sign up for the mobile app, the firm can also monitor your whereabouts via its GPS tracker to see the sorts of places you visit and where you live and work.

The app also has access to your contacts and advises you only to store the details of creditworthy friends and family on your phone.

‘Choose the friends and family that you keep in your contact book wisely,’ it says on the app.

Carphone Warehouse’s iD Mobile says it is working with Friendlyscore to trial its technology as an alternative way of verifying someone’s identity.

This should help people who have not yet built up a traditional credit history, perhaps because they are young or new to the country. Friendlyscore adds that it doesn’t see any of the data collected and says it does not assess the creditworthiness of customers.

Loubna Bazine, chief executive of Friendlyscore, says: ‘All of the data analysis is done by machines. No humans look at it. We then pass the company a score and a short report of our findings.’

She says around 10,000 people have signed up to its service in the UK and that the firm has created scores for 1 million people worldwide.

Friendlyscore, which has a London office, is applying for a licence from the financial regulator to be able to view your bank account spending under the new Open Banking rules.

Some customers may have used this type of credit scoring system without even hearing of Friendlyscore, as firms can choose to brand the service as their own.

Data analytics company Hello Soda, based in Manchester, said on its website that it has worked with Visa Europe and payday lender peachy.co.uk. It said its software system ‘Profile’ — which can be integrated into a firm’s sign-up or application process — can analyse the digital ‘footprint’ of a consumer to verify their identity and personalise marketing.

On the Peachy website, for example, you can sign up for a loan through your Facebook account.

If you do this Peachy will receive access to your posts, birthday, education and work history, email address and even photos and posts you have ‘liked’. Again, customers must first give their permission for firms to access their data.

A report published two years ago by Visa Europe, which no longer works with Hello Soda, says: ‘It is much harder to fake a genuine social media footprint than it is to falsify alternative means of identification.’

It adds that this type of technology could reduce fraud as the more firms know about customers and their behaviour, the more likely it is that they will spot out-of-the-ordinary spending.

This type of information also allows firms to personalise advertisements and products based on your hobbies and interests.

Facebook checks for car cover

Insurers keep a close eye on their customers’ social media profiles to weed out suspected fraud.

In one case dealt with by the Financial Ombudsman last year, an insurer tried to stop making payments to a customer who had claimed on their income protection policy.

The insurer, Unum, had found posts on a social media site that showed the customer, who had been diagnosed with chronic fatigue syndrome, taking part in activities that ‘were inconsistent with his reported limitations’.

However, the Ombudsman ordered Unum to continue paying, with 8 per cent interest as well as £500 compensation, because the customer had been advised by his doctor to stay off work.

In another case, Axa refused to pay a car insurance claim following an accident on the basis that the customer had failed to mention that her vehicle had been modified.

The woman claimed she hadn’t disclosed the alterations because she didn’t know about them.

But Axa discovered posts on a social media website where the woman’s family discussed the car in great detail. It said this was proof that the woman should have known that the vehicle had undergone major changes — and the Ombudsman took the insurer’s side.

Insurers are also looking at ways they can use social media to work out how much customers should pay.

In 2016 car insurer Admiral said it intended to use Facebook posts to help it price premiums. It planned to use techniques pioneered by scientists which involve analysing customers’ language for clues as to whether or not someone is a good risk.

The theory is customers who write short, concrete sentences, make lists or use exact mentions of time are likely to be conscientious and therefore a safe driver.

Repeated use of exclamation marks, on the other hand, could indicate that someone was over-confident and so more likely to speed. The project ran into trouble after Facebook barred the firm from using people’s data in this way.

Admiral has since launched First Car Quote, an insurer for new motorists who are typically charged much higher premiums.

Customers must sign into the website via their Facebook profile to get a quote. They will then receive details of their policy through Facebook’s private messaging service. Admiral told Money Mail that the only personal data it uses is your name, email address and date of birth.

It says that signing in through Facebook speeds up the application process as this information is automatically filled in.

A spokesman for First Car Quote says: ‘We don’t have access to any other customer Facebook data. We do not use personality quizzes nor do we use data scoring cookies on our website to set prices for customers.’

However, in First Car Quote’s privacy policy it states that customers are agreeing to the firm collecting ‘lifestyle and other behavioural information’ about them.

Social media credit scoring

Experts say lenders and brokers are increasingly looking at homebuyers’ social media profiles — particularly new borrowers with a limited credit history.

Ray Boulger, of mortgage brokers John Charcol, says: ‘First-time buyers are in a tricky situation because their credit rating is often low, simply because they haven’t had a mortgage before.

‘This is when a lender is most likely to turn to other sources to judge their eligibility and check what kind of lifestyle they lead.’

If you claim to spend a modest amount of money on holidays, but post pictures from expensive trips overseas you could find you’re turned down. One borrower was recently turned down because of how he described his job on LinkedIn.

He had been self-employed for more than a decade and made a minor change to his profile saying he had stopped freelancing for an agency.

The lender spotted the change and became suspicious that this meant the borrower had worked on staff for the agency and had only just become self-employed. It refused the loan application, despite evidence that the borrower still had a steady income.

Frazer Horton, managing director of mortgage broker Edward Frazer, says: ‘I find this a very worrying development. LinkedIn is effectively a dating site for people looking for work or trying to ‘big up’ their careers. Information is presented in such a way as to drum up business.

‘To give the information anything other than the most passing regard or to draw the conclusions that the lender has seems ludicrous.’

The taxman is watching too

HM Revenue & Customs inspectors regularly snoop on social media websites to check people are paying the correct amount of tax.

They are looking for people whose lifestyles do not match their declared earnings.

If they see someone who claims to be on a low income posting pictures of flashy cars or luxury holidays, it raises a red flag.

Fiona Fernie, a tax partner at London accountancy firm Blick Rothenberg, says one of her clients was questioned by the taxman after posting pictures of a Ferrari parked in their driveway.

In fact, the client had inherited — not bought — the car and planned to sell it because they couldn’t afford the cost of upkeep.

Fiona says tax inspectors are most interested in the two main indicators of wealth — the value of someone’s house and their car.

Anything the taxman finds is plugged into HMRC’s database, Connect, which contains data about you from government records, banks and building societies, the Land Registry and DVLA details.

Ms Fernie says that misinformation posted online can be damaging.

She had one client who was named in a local newspaper which said they had been living in the UK for decades.

In fact, they had only recently returned after living abroad. HMRC grilled the client to check they hadn’t actually been living in the UK and failed to declare earnings.

In 2016, HMRC gained powers to spy on eBay and Airbnb customers’ accounts to find out what they buy and sell. It means investigators can get users’ names, addresses and bank account numbers.

If someone is selling the odd piece of second-hand furniture, the taxman will pay no notice. But if you are trading full-time, it will check whether your earnings have been declared. HMRC can also see customers’ online shopping and sales receipts with payment firms such as PayPal and Worldpay.

Dawn Register, a tax partner at BDO, says HMRC uses Google Earth to spy on properties to check if you’re building on your property.

‘If you’ve forked out for a massive extension but are declaring a low income, that’ll raise a red flag. And if you’ve built a granny flat, they could ask why you’re not declaring a rental income,’ she says.

A spokesman for the taxman says: ‘HMRC collects and analyses data from a range of sources to understand and manage risks to the tax system. Sometimes this includes the use of publicly available data.’

HMRC adds that while it often checks the social media profiles of people whose tax affairs they are looking into, this information would not be the starting point of any investigation.

v.bischoff@dailymail.co.uk

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