How Payday Loans and Personal Data are Used Against the Poor

Inside Subprime: March 26, 2019

By Lindsay Frankel

Personal data is increasingly being used to restrict low-income Americans’ access to resources, and poor people have their privacy invaded at work, at home, and during their efforts to obtain much-needed government services.

In 2007, a decades-old supreme court decision that home visits should be required for people applying for welfare benefits was upheld by the court, which compared mothers on welfare to criminals on probation with regards to privacy rights.

Surveillance techniques hit the poor the hardest, and there’s historical precedent for this type of inequality dating back to Colonial America, when most towns had a position dedicated to tracking the activity of poor people. Nowadays, public benefit programs often require home visits, drug tests, the collection of detailed personal information and biometric information, and fingerprinting. Low-income workers often go through psychometric tests and drug tests as conditions of employment, and their phone calls monitored during work as well. Yet government income transfers to higher-income Americans do not require the same invasion of privacy.

Furthermore, predatory payday loan firms use personal data to target low-income Americans with ads, tempting them with high-interest loans that can push them further into debt. And scam artists target low-income Americans as well, creating a high degree of concern for this segment of the population. 11 percent of households earning less than $20,000 per year have fallen victim to a scam, when compared to only 4 percent of those with six-figure incomes, according to a 2015 survey.

“The harms for low-income people of a lack of data privacy are more concrete than for middle- and upper-income people,” law professor Michele E. Gilman told Fast Company. “You become a target of predatory financial services, or on the other extreme you’re excluded from more desirable offerings.”

Research also shows that low-income Americans are less informed and more concerned about data privacy risks. A survey conducted by Mary Madden found that 60 percent of adults with annual household incomes of less than $40,000 reported that they were very concerned about the theft of their financial data, while only 38 percent of higher-income households expressed the same level of concern. Low-income respondents also felt they lacked the resources to learn strategies to protect their personal information, though they were more interested than higher-income groups in learning methods of keeping their data safe.

Madden’s findings are supported by a body of work from security researcher Elissa Redmiles, who found that low-income consumers used less authoritative sources for security advice than those with higher incomes and better training.

Lower-income individuals also lack the resources and time for more robust security protections or managing online reputations. “Your upper-middle-class or upper-class American has a wide array of resources, and is much more likely to have the time to do things like hire a company to scrub the internet of any unsavory information or to learn how to game a hiring algorithm to get an employer to look at your resume,” said Madden.

New privacy laws are being considered that would protect a wider range of Americans, and some states have already passed laws designed to give internet users more control and transparency with regards to their personal information. But Gilman hopes that low-income Americans aren’t forgotten in the process. “I just want to make sure that if things get enacted, there is attention to people who are marginalized, who experience privacy differently. Otherwise, we’re just going to maintain the privacy haves and privacy have-nots, where privacy is a luxury for affluent people,” she said.

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