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The Rapid Rise Of Social Credit Scores

The most common association with the term “social credit score” is with China. Since roughly 2014, the Chinese government has been working on the system, which is designed to be a “method to perfect the socialist market economy system, accelerating and innovating social governance,” according to a State Council notice from 2014.

“China’s social credit system is an ambitious, technology-driven initiative through which the state seeks to create a central repository of data on natural and legal persons that can be used to monitor, assess and change their actions through incentives of punishment and reward,” according to a recent paper on the topic from the Mercator Institute for China Studies (MERICS).

The system has generated no small amount of controversy (the phrase “big brother” comes up an awful lot). Last year, millions of Chinese travelers were banned from buying airline tickets because of outstanding social credit offenses.

All in, individuals were blocked from buying tickets 17.5 million times last year for offenses such as unpaid taxes and fines. Consumers were also barred 5.5 million times from purchasing train tickets, and 128 people were blocked from leaving the country because of unpaid taxes. This has led consumers in China to complain that the system is a back-door mechanism for social control, largely meant to limit the freedom of mobility among Chinese nationals.

Hou Yunchun, a former deputy director of China’s development research center of the State Council, noted this is not the case, but that in order for the social credit system to be credible, there must be actual consequences for failing to maintain a good rating.

“If we don’t increase the cost of being discredited, we are encouraging discredited people to keep at it,” Hou reportedly said. “That destroys the whole standard.”

Hou’s sentiments are reflected in a state slogan that has been making the local rounds for the last several years: “Once you lose trust, you will face restrictions everywhere.”

The main critique of the algorithm tracking system China reportedly uses to screen the web for individual consumers’ data is the relative lack of detail as to what information the government is gathering, and what exactly will land a consumer in trouble. Not paying one’s debts, for example, is an obvious one. But offenses like “spreading fake news on social media” or “causing a disturbance on a flight” can result in getting banned from public transportation for a year, as an example.

There is also concern about the size and scope of the program, in China and around the world. As of 2019, the Chinese government reported having 990 million records on individuals and 25.91 million on enterprises.

And while for most people, China is the main association with the concept of social credit systems, they are increasingly joined in the effort by both government and non-government actors. According to data recently released in a report by Research and Markets, infrastructure to support social credit systems is expected to represent a nearly $13 billion global opportunity by 2024, as cameras and other optical equipment for social credit systems are poised to reach a value of $300 million globally by that year.

The report’s authors predict that by 2026, the concept of social credit systems will be entirely mainstream in the U.S. and around the world.

It’s an assertion that is backed up by a series of reports this week stating that while the U.S. government is not building a social credit system a la China, private industry arguably is.

For example, earlier this year, the New York State Department of Financial Services announced that life insurance companies can base premiums on what they find in your social media posts. If you demonstrate a life lived on the edge, that can cost you; if you show a life of careful and healthy behavior, that might net a reward.

Startup PatronScan offers a service that allows bars to scan IDs and keep a running list of which ones are associated with trouble (such as having a fake ID or showing a tendency to start bar fights) that can result in patrons getting banned. And Airbnb and Uber are among the host of service-based gig economy platforms that closely monitor its patrons’ reviews – if someone establishes a history of trashing host houses or harassing ridesharing drivers, they could easily find themselves banned for life.

The list goes on and on – and the main complaint about how social credit exists in the U.S., as opposed to a state-supported system like China‘s, is that the system used by private companies and tech firms is essentially a black box. The customer can be punished – and, in some cases, cut off from vital access to things like transportation – without ever fully understanding the reason or the basis, and with almost no recourse to protest the decision.

Proponents of social scoring note that private businesses are unlikely to have complex ulterior motives – Uber wants to give as many rides as it can and Airbnb wants to rent out as many properties as possible. If they are banning someone, they argue, it is not because they have a personal stake in doing so – it is because that person represents a danger.

The issue, needless to say, is complicated, and growing more so by the day. Whether social credit is good and useful or invasive and creepy, it is coming. And if the recent data is to be believed, it is coming very, very quickly.

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