At the direct level of interaction between the loan seeker and the lender, the penetration into the former’s private matters is justified against the backdrop of her conspicuous consent. This is a simple and in many ways reasonable transaction: one barters the private details of one’s life for better interest rates. Trading away personal information in return for products or services is not new and has long been a dominant model in other markets. A very common example is the behavioral advertising business model, in which advertising is selected and displayed based on information about the individual user.174 Data is often collected based on
a consensual exchange, in which personal information is used as currency to pay for various products and services.175
Critics challenge this assumption, arguing that users cannot reasonably estimate their disutility from the tradeoff and the harm associated with the data collection.176 Unlike a common
retail transaction, the ongoing nature of the “payment” (i.e., data collection) that is not completed at the point of purchase 173 At some point Lenddo, for example, checked messages for shared slang or wording that suggests affinity. See Stat oil, ECONOMIST (Feb. 9,
2013), http://www.economist.com/news/finance-and-economics/21571468- lenders-are-turning-social-media-assess-borrowers-stat-oil [http:// perma.cc/5FLK-KYG5].
174 Katherine J. Strandburg, Free Fall: The Online Market’s
Consumer Preference Disconnect, 2013 U.CHI.LEGAL F. 95, 100 (2013).
175 Id. at 106. 176 Id. at 107.
further obstructs users’ ability to appreciate the privacy harm.177
While those arguments have some merit in the behavioral advertising context, they lose much of it when applied to data collection by social credit services. The social credit framework is predicated on a different kind of information sharing: to be considered for a loan, a candidate must interact closely with the service, fill out an application, browse through the app or webpage to learn about the various products, and then select those suitable for her needs. As opposed to the passive, often oblivious sharing of information presented by the behavioral advertising business model, applicants for social credit-based loans engage in an active, voluntary, and better-informed sharing of personal details. From a user’s perspective, this information is shared and the subsequent surveillance is agreed to at low or no apparent cost for a clear economic reward.
Businesses built around consensual disclosure of previously unavailable information in return for a discount or other financial incentive exist and flourish in other markets as well. An example of this model is Progressive Snapshot.178 The insurance company Progressive
Corporation has gone beyond calculating risk based on one’s accident record and created a voluntary driver-monitoring program called Snapshot. Consumers who choose to enroll receive a personalized insurance rate from Progressive based on their safe driving habits as recorded by a small box plugged into their vehicle.179 Data about a driver’s mileage,
vehicle speed, timing of driving (day or night), and frequency of hard braking is amassed and analyzed to establish one’s driving patterns and accordingly estimate the risk posed to
177 Id. at 130–31.
178 See PROGRESSIVE, https://www.progressive.com/auto/snapshot/ [http://perma.cc/R63Q-23AD].
179 See Snapshot Terms and Conditions, PROGRESSIVE, https://www. progressive.com/auto/snapshot-terms-conditions/ [http://perma.cc/H4VZ- SM68].
the insurance company.180 Additional data such as record
location information is collected in some devices for research and development purposes, and Progressive states that it would retain information collected or derived from the device indefinitely.181 The Snapshot program seems to have gained
traction, with more than 2.5 million enrolled drivers that share information about their habits to get better premium rates.182
Authorizing collection and use of personal information in exchange for an economic benefit makes perfect economic sense to some consumers.183 As those exchanges materialize
in various markets, they appeal to a wide range of consumers with different sets of preferences. A study by the European Network and Information Security Agency found that, when given a choice, the majority of consumers would prefer buying from a more privacy-invasive provider if they charged a lower price.184 Against this backdrop, we argue
that the challenge lies not in the direct interaction between the social credit providers and loan seekers because this interaction can be justified on freedom of contracts grounds.
180 Id. 181 Id.
182 See Press Release, Progressive, Safer Drivers Pay Less for Car Insurance with Snapshot Pay As You Drive Insurance Program from Progressive (May 20, 2015), http://www.marketwatch.com/story/safer- drivers-pay-less-for-car-insurance-with-snapshot-pay-as-you-drive-insur ance-program-from-progressive-2015-05-20 [http://perma.cc/7LP5-5ASV].
183 Peppet, supra note 17, at 1157 (“Even with control over her personal information, he argued, an individual will often find it in her self- interest to disclose such information to others for economic gain. If she can credibly signal to a health insurer that she does not smoke, she will pay lower premiums.”).
184 NICOLA JENTZSCH ET AL., EUR. NETWORK & INFO. SEC. AGENCY, STUDY ON MONETISING PRIVACY: AN ECONOMIC MODEL FOR PRICING
PERSONAL INFORMATION 1 (2012), https://www.enisa.europa.eu/activities/
identity-and-trust/library/deliverables/monetising-privacy [http://perma.cc/ V3LJ-3424].