uLending Startups Use Borrowers’ Smartphone Behavior To Decide If They Are Creditworthyr

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  The wallet-sized – or larger – smartphone constantly tethered to your hand may often be seen as your connection to the outside world. Each time you surf the web, connect with friends, make purchases and check your bank account, it’s collecting mountains of data about you. And that data could soon be analyzed to determine if you’re creditworthy. 

  Or at least that’s the idea behind a number of lending startups trying to revamp the way consumers in developing countries obtain needed lines of credit, despite having no actual credit history, the Wall Street Journal reports.

  The companies say that by glancing at a person’s cellphone they can access data generated by apps and uncover behavior that correlates with the likelihood that a borrower will repay or default on a loan.

  To access a potential borrower’s phone, the companies have created a slew of apps, which analyze information stored on the device, including the content of their text messages, emails and duration or frequency of calls.

  That means the decision on whether or not someone qualifies for credit could hinge on how often they charge their phone or whether or not they add a last name to stored contacts.

  Branch.co already has such a program up and running in Kenya, where an Android app lets users apply for small loans, get approved and obtain access to the funds in minutes.

  The loans, which average just $30, come with a 6% to 12% interest rate depending on a borrower’s creditworthiness as determined by their smartphone behavior and are expected to be repaid within three to six months.

  “These are people that don’t have a credit score,” Branch founder Matt Flannery said. “Your digital trail can establish your financial track record.”

  Each startup, and its corresponding app, has a different method for culling and analyzing the smartphone data.

  For example, a company called InVenture, which also operates in Kenya, found that users who wait until after 10 p.m. to make calls are often lower-risk borrowers.

  “You’re able to get in and really understand the daily life of these customers,” InVenture CEO Shivani Siroya tells the WSJ, noting that the company’s algorithm analyzes 10,000 so-called signals per customer in order to determine creditworthiness.

  In another example of data analysis, Branch found users who are known gamblers – a detail found by scanning messages or payment logs – are more likely to repay a loan than non-gamblers.

  Customers of the apps in Kenya tell the WSJ they chose to borrow through the startups to pay for running or improving their small businesses because banks were too far away or imposed higher interest rates.

  The owner of a health and beauty store used the funds for items like skin cleansers when her account was running low, while a chef used the credit line to purchase plates, cutlery and pots.

  The WSJ estimates that lending startups like Branch and InVenture could bring needed lines of credit to up to 580 million people living in emerging economies.

  Of course, with the amount of sometimes sensitive data being collected by these startups and other companies, privacy is a big concern for both consumers and privacy advocates, who warn that some data could be misconstrued by the algorithms.

  For example, advocates shared concerns with the WSJ that someone may be denied a loan because they simply Tweeted “my car has broken down.”

  Still, a survey of dozens of people in developing countries found that most had no problem sharing personal information in exchange for lines of credit.

  While these companies are focused on emerging markets markets outside of the U.S., other so-called smartphone lenders like LendUp and ZestFinance use similar algorithms and process to provide credit to American consumers.

  Making the decision to lend based on non-traditional data sources isn’t just contained to startups: the WSJ reports that companies like Visa have built mobile payment apps.

  In August, social media behemoth Facebook received a patent that would allow lenders to determine a borrower’s creditworthiness by looking at their “friends.” It’s unclear if that project will ever come to fruition.

  Lending Startups Look at Borrowers’ Phone Usage to Assess Creditworthiness [The Wall Street Journal]

  
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by Ashlee Kieler via Consumerist

uStudy Claims Adult Happy Meals Could Lead People To Eat Smaller Portionsr

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  McDonald’s has long been criticized for using toys and other incentives in Happy Meals to get young kids craving fast food. But could the same “prize included” approach be used to encourage adults to eat smaller portions?

  New research from the University of Arizona’s Eller College of Management suggests that the “Happy Meal Effect” could be used to incentivize adult consumers to purchase more health-friendly food options.

  Eller’s Martin Reimann, along with Antoine Bechara and Deborah MacInnis of the University of Southern California, performed a number of experiments to find out if offering a non-food bonus with a menu item was enough to steer both kids and adults toward an option that was not as filling as an offering without the bonus.

  When a group of sixth-grade students were presented with the option of a full sandwich and no prize or a half-sandwich and a pair of cheap bud-style earphones, 78% of them went for the smaller sandwich.

  Kids were even more likely to go with the prize-included half portion when the food in question was something youngster-friendly like chicken nuggets or cookies.

  The researchers found that you only need to present the opportunity for a prize to get people to select the smaller portion. They presented university staff and students with a choice between full lunches without any sort of incentive, and half portions that included only the chance of winning a $100 gift card or 10,000 frequent flier miles. Even just that hope of winning a prize was enough to steer a significant number of adults to the smaller portion.

  The likelihood of people to pick a half portion with a non-guaranteed prize was affected by several things. Researchers say that when test subjects knew the odds of winning a prize (even if the odds were good), the Happy Meal Effect wasn’t as strong as it was when subjects merely knew that a prize could be won.

  The dollar amount of the potential prize was also a factor that could sway results. Researchers say that the likelihood of choosing the smaller portion grew exponentially as the value increased from $10 to $50. However, there was little difference between the results for a possible $50 reward and a possible $100 prize.

  Perhaps most importantly, the research found that test subjects who opted for smaller portions were not later eating more to account for the fact that they didn’t each the larger portion at lunch.

  Reimann suggests this sort of incentivizing might be a way for restaurants to encourage smaller portion consumption while avoiding regulatory and legislative efforts to rein in consumption of high-calorie foods.

  “If non-food rewards, even small and uncertain ones, can be just as engaging at a neurochemical level, then restaurants can potentially motivate healthier choices without jeopardizing sales, and consumers have more paths to avoid overeating,” he explains.

  
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by Chris Morran via Consumerist

uAdobe Joins Its Critics, Tells People Not To Use Flashr

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  After years of critics piling on top of Adobe Flash for its track record as one of the buggiest, crashiest (now a word), least secure, most vulnerable pieces of software ever to hit the web, Adobe itself is siding with its detractors (including Google, Amazon, Facebook and Firefox, etc.), and is letting everyone know they should stop using Flash. No, really.

  To be clear, Adobe isn’t killing of Flash, entirely. It’ll be up to web developers what they want to use, after all.

  But in a blog post last night, the company said that it will now “encourage content creators to build with new web standards,” such as HTML5, instead of Flash.

  Flash, though once a great tool for creating web games and animations, has been less and less popular over the last 10 years: Flash pages and players load slowly and drain laptop batteries, and it isn’t widely supported on smartphones. It’s also been subject to a slew of security issues, making it a risky prospect for users browsing the web.

  Again, Flash is here to stay — at least for now — and Adobe won’t be cutting off support for it, the company noted. Instead, it’ll be focusing on beefing up security, and changing its Flash Professional CC animation tool to a new name: Animate CC, which will be the company’s “premier web animation tool for developing HTML5 content” starting in 2016.

  “While standards like HTML5 will be the web platform of the future across all devices, Flash continues to be used in key categories like web gaming and premium video, where new standards have yet to fully mature,” Adobe says. “Moving forward, Adobe is committed to working with industry partners, as we have with Microsoft and Google, to help ensure the ongoing compatibility and security of Flash content.”

  
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by Mary Beth Quirk via Consumerist

uVTech Hack Exposed Tens Of Thousands Of Photos & Chat Logs Of Parents, Kidsr

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• The recent breach of popular children’s electric toy maker VTech compromised the personal information of nearly five million parents and children, but a new report claims the hack exposed even more sensitive information: photos and chat logs between children and their parents. 

  The anonymous hacker taking credit for the Nov. 14 breach of the company’s Learning Lodge app store claims VTech left tens of thousands of pictures and a year’s worth of chat logs easily accessible to hackers, Motherboard reports.

  The hacker says the new data came from the company’s Kid Connect service, which allows parents using a smartphone app to chat with their child using a VTech tablet.

  Photos stored in the VTech server were the result of Kid Connect’s online tutorials that encouraged the 2.3 million registered users – both parents and children – to take headshots for use in the app.

  VTech did not respond to Motherboard’s request for comment on the new revelation.

  ”Frankly, it makes me sick that I was able to get all this stuff,” the hacker told Motherboard in an encrypted chat. ”VTech should have the book thrown at them.”

  The hacker, who provided more than 3,800 of the photos to Motherboard as verification, also found year-old chat logs between parents and kids and some audio files on the breached VTech servers.

  The photos, chat logs and audio files, can easily be linked back to the personal account information previously exposed by the breach, the hacker says.

  “I can get a random Kid Connect account, look through the dump, link them to their circle of friends, and the parent who registered at Learning Lodge [VTech’s app store],” the hacker told Motherboard, noting that he doesn’t plan to sell or publish the compromised data. “I have the personal information of the parent and the profile pictures, emails, [Kid Connect] passwords, nicknames…of everyone in their Kid Connect contacts list.”

  VTech announced Monday that “as a precautionary measure” it had temporarily suspended the Learning Lodge and a dozen websites for a “thorough security assessment and fortification.”

  Hacker Obtained Children’s Headshots and Chatlogs From Toymaker VTech [Motherboard]

  
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by Ashlee Kieler via Consumerist

uJimmy John’s Jimmy John Decides Against Taking Sandwich Chain Publicr

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  With more than 2,000 sandwich-slinging stores across the country raking in some $2 billion a year in sales, Illinois-based Jimmy John’s seems like the perfect business to take public. But Jimmy John himself has decided against trying to cash in with an initial public offering.

  CEO, founder, and majority owner Jimmy John Liautaud tells Bloomberg that he had been considering going public for the last couple of years, but ultimately opted to keep things private for now.

  He likens the years of prep to making an entire Thanksgiving dinner and then tossing it in the trash “right before I was going to serve it.”

  In recent months, the company, which would have gone public with an estimated value of around $2 billion, had been putting together meetings about an IPO. But the decision was made in October to focus on expansion plans — including 1,300 stores set to open in California in the coming years — instead of going public.

  Jimmy John, who started the business shortly after — by his own admission — graduating second-to-last in his high school class, said he ultimately decided that the world of IPOs and stock markets just wasn’t for him.

  “I don’t think my wheelhouse is comfortable in Wall Street,” he tells Bloomberg. “My wheelhouse is small-town America.”

  
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by Chris Morran via Consumerist

uCelery Supplier Linked To Costco Chicken Salad E. Coli Outbreak Issues Recalls Affecting 13 More Retailersr

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  The E. Coli outbreak linked to a rotisserie chicken salad sold by Costco that’s sickened 19 customers in seven states has been traced back to a single ingredient: celery that comes from a supplier in California. That farm has now issued a recall for a slew of products that could contain tainted celery sold at 13 additional retailers across the country.

  The Food and Drug Administration issued a notice that Taylor Farms Pacific of Tracy, CA is issuing a recall for items that may contain the celery in question. Along with Costco, 7-Eleven, King Sooper, Pantry, Raleys, Savemart, Tonys, Albertsons, Safeway, Vons, Starbucks, Target, Walmart and Sams Club are all included in the list.

  Click here for a complete list of the products being recalled. The items vary — some are simply diced celery mixes, while others are pre-made salads — potato, pasta, tuna, chicken, etc. — or kits to make your own salad containing the possibly tainted veggies.

  This strain of E. Coli can cause an illness that could develop into a form of kidney failure, the FDA notes, which is most likely to occur in y oung children and the elderly, so it’s important to remain vigilant. If you’re worried you’ve become ill from eating the products, contact your health care provider.

  Thus far, 19 people have been infected with E. coli in California, Colorado, Missouri, Montana, Utah, Virginia, and Washington.

  Customers who have any of the recalled products should toss them straight in the garbage. You can call 209-830-3141 for any further information Monday to Friday, between the hours of 8am-5pm (PST).

  
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by Mary Beth Quirk via Consumerist

uCompany Must Pay $1.35M For Claiming Copper-Infused Sleeves Relieve Chronic Painr

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• Slapping on a knee brace or wrapping your ankle might provide a bit of comfort for aches and pains related to physical activity, but who wants to do all that work when slipping on copper-infused compression clothing can take all your pain away? That seems like a simple, easy way to rid yourself of severe and chronic pain and inflammation, you know, if it were actually backed by science. But it apparently wasn’t, and now athletic apparel company Tommie Copper must pay for that little oversight – to the tune of $1.35 million.

  The Federal Trade Commission announced Tuesday that it had reached a proposed settlement [PDF] with Tommie Copper and its founder, Thomas Kallish, to resolve allegations the company deceptively advertised that its copper-infused compression clothing would relieve pain and inflammation caused by arthritis and other diseases.

  According to the FTC’s complaint [PDF], since 2011 New York-based Tommie Copper advertised the copper-infused compression garments in infomercials, brochures, social media, and print media such as Arthritis Today magazine without “competent and reliable scientific evidence” to back up its claims.

  The garments, which include sleeves, braces, shirts and socks, sold for $29.95 to $69.50 each, generating an estimated $87 million from April 2011 to October 2014.

  Infomercials for Tommie Copper featured a well-known talk show host (and payday loan apologist) exclaiming that “Tommie Copper truly is pain relief without a pill.”

  Other ads featured celebrity and consumer testimonials claiming that Tommie Copper garments alleviated pain caused by multiple sclerosis, arthritis, and fibromyalgia.

  “Love this product. I have been having issues due to RA [Rheumatoid Arthritis] with swelling and pain in my left knee . . . . Since wearing the [Tommie Copper] knee sleeve, it has kept my knee from swelling, decreasing my knee pain at the end of the day . . . . Thanks for creating a great product!” a user of the products said in a brochure.

  The marketing also claimed the products could provide pain relief comparable to, or better than, drugs or surgery.

  “I had a torn cartilage in my knee years ago …. I was scheduled for surgery September 11, 2012 to have another knee replacement on my right knee,” one user says in a Tommie Copper YouTube advertisement. “I had gone to the gym and I limped in one day, my right knee was bothering me. So, one of the guys saw me in the gym and said, what’s the matter with you? I said, wow, my right knee is bothering me, I’ve probably got another bad knee …. [H]e threw me a Tommie Copper sleeve. I put it on, great. Next day I saw him, I said, … you got to get me another one for my replaced knee because it feels that good. I put them on and I have not taken them off since. I have not done surgery [sic] and I am not going anywhere near the surgeon’s knife. I am fine just the way it is.”

  The FTC alleges that claims included in Tommie Copper’s ads were deceptive as they contained false or unsubstantiated information.

  Under the proposed settlement, Tommie Copper and its founder must pay $86.8 million, however that judgment will be partially suspended after the payment of $1.35 million to be distributed to consumers deceived by the company.

  If the defendants are found to have misrepresented their financial condition, the total amount will immediately come due.

  With the settlement Tommie Copper and its founder do not admit or deny any of the allegations levied by the FTC.

  
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by Ashlee Kieler via Consumerist