Coronavirus Debt Will Live in Digital Profiles for Years – Impeding Americans’ Ability to Get Jobs, Apartments, and Credit | Kiowa County Press


People wearing face masks line up to receive free food from a pantry run by the Council of Peoples Organization on May 8, 2020 in the Midwood neighborhood of Brooklyn, New York. Andrew Lichtenstein / Corbis via Getty Images

Michèle Gilman, University of Baltimore

Long after the COVID-19 health emergency ends, many Americans will still suffer from the long tail of the the economic devastation of the pandemic. For people on the economic fringes of the country, the proliferation of data analysis tools monitoring the lives of consumers – driven by companies that profit from the collection of personal data – will exacerbate today’s financial difficulties.

These companies extract data from your public records, social media interactions, purchase history and smartphone location tracking. Using powerful technologies, they merge your data into digital profiles that homeowners, employers, lenders and other stewards of the basic necessities of life use to sort and filter people.

Like a professor of clinical law which represents low income people in cases of consumption, I fear that the economic fallout from the pandemic will be permanently anchored in these profiles, which will make it more difficult for people to regain their economic equilibrium.

Moratoriums of expulsion

More 41 million people lost their jobs as a result of the pandemic. In a context of growing unemployment, many states and cities have placed temporary moratoriums on evictions.

New York Governor Andrew Cuomo, for example, suspended evictions until August 20. After June 20, however, tenants requesting relief will need to prove that they are eligible for UI or are in financial hardship. And with the passage of the CARES Act, Congress suspended evictions in federally subsidized housing until August 23.

But when these moratoriums on evictions expire, the bills accumulated will come because. One in four tenants were already spending more than half of their income on rent before the pandemic. In the process, these numbers will only increase because millions of people could be left out of work or be forced to take lower-paying jobs.

Lawyers at the base called for rent cancellation during the pandemic, as well as financial protections for landlords. But without further legislative action, we can expect a tsunami of relocation of housing. This will result in other difficulties, such as increased homelessness and moves to less secure neighborhoods, for years to come.

Numerically coded difficulties

The effects of an eviction can last long after a housing situation has resolved. Businesses capture evictions in people’s credit scores and digital profiles. This has an impact on the ability of people to obtain new housing, as landlords often rely on tenant selection reports or computerized court records to select tenants.

People are also accumulating debt in a rush to pay for food, cover utility bills, and maintain Internet access for work and school. Before COVID-19, medical debt was the main driver of two-thirds personal bankruptcies. The cost of COVID-19 hospital care varies between US $ 20,000 and $ 70,000, the pandemic will likely add to this debt burden.

These exploding debts will lower people’s credit scores and show up in others digital profiles. As a result, many people will be denied loans or pay higher rates for them. They may also find it impossible to pay for a car, plug in utilities, or even find a job, as many employers use automated systems that analyze personal data in order to target and select potential employees.

For consumers able to negotiate with credit card companies and stick to a payment plan – two big uncertainties – the The CARES law stipulates that credit accounts should reflect that they are up to date in payments. However, this provision does not offer any bulwark against the largely unregulated industry of data brokers.

The debt spiral

Predatory financial companies also use profiling tools to attract troubled consumers with payday loans. Typically, these products are short-term, high-interest loans. In the 31 states with no laws limiting these high cost loans, average interest rate close to 400% but can go up to 661%. A large majority of people cannot repay these loans, forcing them to turn to new loans, thus creating a spiral debt trap.

COVID-19 boosted aggression marketing of these high interest rate loans at economically vulnerable Americans.

These payday loans and other debts end up falling into the hands of the debt collectors. One in 3 The Americans have a debt in collection. These cases dominate the civil registers across the country, and 70% of them end in default judgments, meaning there has been no trial.

But that doesn’t mean there aren’t consequences. People whose judgments are passed against them can have their wages and bank accounts seized. Some people end up in jail. The courts have issued arrest warrants for unpaid debts as small as $ 28.

In the majority of states, private debt collectors can enter individual dunning payments made under the CARES Act. Recently, a 79-year-old man recovering from brain surgery had his dunning check carried out from his bank account to satisfy a five-year-old judgment. Another merged data point in digital profiling that a future owner or employer can look at when assessing applicants is debt collection lawsuits.

Experts agree on not who would be counter the harms of digital profiling. Lawmakers can extend moratoriums on evictions and foreclosures, provide tenants with rent assistance, and extend unemployment insurance. They can stop debt collection, prevent predatory lending, and protect stimulus checks. And the financing of civil legal services can help more people understand their housing and consumer rights in a changing landscape.

In addition, Congress may authorize comprehensive privacy legislation give people control over their data; and compel companies that profit from personal data to obey the wishes of consumers.

In the midst of the current health and economic crisis, political leaders would do well to ensure that people are not trapped forever by the digital footprints they unwittingly leave today.

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Michèle Gilman, venerable professor of law, University of Baltimore

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