A credit score is used to determine whether a potential buyer can make a big purchase, but in China a social credit score can be used to hold up more mundane purchasing decisions. 4.9 million people have been banned from flying on planes because of their poor credit scores, according to a report out this week in the Global Times, a news outlet under the Chinese Communist Party's People's Daily. A further 1.65 million are prohibited from taking trains as a result of credit defaults.
In China, while an individual credit rating does use financial information to put together a picture of a Chinese citizen's trustworthiness, social, political and legal variables are also used to construct a consumer profile and assign a score. These scores aren't assigned by financial companies or credit rating agencies, but rather technology firms. According to a Citigroup report published earlier this year, financial-technology companies have about the same number of clients as China's major banks.
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According to the Washington Post, eight private companies have already set up databases with government approval that compiles a range of consumer information. Scores can range from 350 to 950 and are linked to a national identity card.
So what kind of information is used to create a score? Defaulting on a loan, failing to pay taxes, breaking traffic laws, online purchasing decisions or even social media activity can all factor in to a score.
One of the largest is Sesame Credit, a subsidiary of online retailer Alibaba, which has a user base 400 million strong, and already has a system up and running. In fact, Baihe, an online dating service in China with 90 million clients, encourages users to display their Sesame Credit score in order to attract a mate.
It almost sounds like something out of a dystopian sci-fi thriller, and in fact a similar system was featured in a recent episode of the show "Black Mirror." But in China, such a system is already in place, and though it's allegedly voluntary for now, it will become mandatory in 2020. The program is still in its infancy, Wang Zhenyu, a researcher with the China University of Political Science and Law, told the Global Times, and more transparency is needed, making punishments clear and allowing for an appeals process.
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Although it's unlikely that the United States would implement such a system any time soon, "we should take overseas uses of these technologies as a warning of what we don't want to see here," Jay Stanley, senior policy analyst with the American Civil Liberties Union's (ACLU) Speech, Privacy, and Technology Project, told Seeker.
Stanley, who focuses on privacy issues in the United States, sees some local parallels to the social credit system in China, "in terms of the collection of data on individuals and their activities, the use of that data to give people scores to make judgments and predictions, and the use of those kinds of scores to produce the behaviors that institutions want."
"With technology moving forward at a breakneck pace, we need to pay heed to some of the darker ways in which this technology could be used," Stanley said.
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