If you’ve ever watched mob shows like The Godfather or The Sopranos you’re probably familiar with loan sharks. Loan Sharks are mobsters who lend money to people in desperate circumstances, often with gambling debt or a drug habit. These loans are made at outrageous interest rates, like 25% per week, and if you can’t pay when due, they send a tough guy to break your fingers, or much worse.
However, not all loan sharks are mobsters and not all customers have gambling debt. Retail payday loan shops have been around for decades in less affluent neighbourhoods offering instant small loans to those living paycheck to paycheck. The interest on a payday loan is usurious (30+% a year), but at least Money Mart and the like won’t send someone with a baseball bat to your house if you miss a payment.
As reported by Caitlin Harrington in WIRED, the 21st century loan shark is more likely from Silicon Valley than New Jersey and far more interested in your data than intimidation.
Different shark, same teeth
Sadly, many people struggling to make ends meet are resorting to the 21st century alternative to a loan shark – a data shark. Silicon Valley Data Sharks are a different breed but their bite can be just as devastating. These sharks offer online payday loans to ‘eligible’ customers, but only if clients agree to some of the most egregious data exploitation I’ve ever seen.
Just download the app from B9 or Earnin, and “connect your bank account and add your employment info to help us recognize your pay schedule.” “Deposit funds from your paycheck into your account and get early access to your earnings for the last 15 days.”
Sounds awesome right? As easy as ordering an Uber car or dinner from Skip the Dishes. So what if they know where you work, when you get paid and how much you earn, right?
A broken finger might be better
B9, Earnin and other payday loan apps require that you link your account to your online payroll provider, for example, Paychex. What you don’t know is that Paychex is not just an online payroll provider, they are an online payroll and human resources firm.
By linking your payroll to your payday loan, you agree to surrender all your personal information, where you work, where you live and how much you earn. Paychex can then sell any of this data to your employer if for example, your supervisor suspects you’re working multiple jobs, or if you’re actually at home when you’ve called in sick.
For someone with marginal income this invasion of privacy can result in job loss or having shifts reduced on a whim by an unscrupulous employer taking advantage of a worker in a financial bind. Imagine your boss knowing you’re under duress, or that you need this job far more than they need you. This powerful data-driven knowledge can be used to further exploit you.