European Expert Flora Sapio: Private Credit Data Influences Public Policy?!
Professor Flora Sapio during the seminar
Zhonghongwang, 26 April 2018
Zhonghongwang – Beijing, April 25 (Reporter Wang Jingrong). Professor Flora Sapio, formerly a honorary fellow at CIW, while attending the seminar said that in Europe the concept of “credit” mainly refers to credit itself, rather than to social credit. One obvious difference is that Europe does not have a holistic way to regulate the credit system. Credit repair is also a relatively new issue in Europe. For example, the legal regulation of the collection, analysis and use of personal data is still being improved in the 28 countries of the EU.
In Europe, Credit Data is Dominated by the Private Sector
As researcher on China issues, Professor Flora Sapio paid a high attention to China Planning Outline on the Construction of a Social Credity System 2014 – 2020 (hereinafter referred to as the ” Outline ” ), and she translated important documents from the central government and various ministries and commissions in English, to introduce them to the English speaking world. In her view, to understand the characteristics of China’s credit construction, the opening sentence of the “Outline” – “The social credit system is an important part of the socialist market economic system and social governance system.” – is critical. Flora Sapio believes that even though China’s social credit system is very comprehensive, it still belongs to part of the socialist economic system. It is also composed of four parts: laws, regulations, standards, and contracts. Flora Sapio stressed that “in China this is a very systematic, top-down system.”
Flora Sapio believes that social credit as a social mechanism depends on data collection, data analysis, data sharing between the government and the private sector, as well as the evaluation of business behavior, and the resulting reward and punishment system. In Europe, the same functions exist, but these functions exist in a completely different form. In Europe, they mainly refer to Big Data in the market and the management of big data. In the public sector, there is also the government’s management of data. These two parts are independent. When we discuss data collection, analysis, and algorithms, these behaviors are first guided by the private sector in the market and gradually used by the public sector. The way these data are generated depends to a large extent on individuals in the market who actively share these data.
In Europe, How Does Data Affect the Public Sector?
Flora Sapio, by citing the Cambridge Analytica scandal involving the Brexit campaign in the United Kingdom, and how the analysis of data gathered through the social network platform Facebook may be used to influence public voting, noted how this type of information collection and analysis is highly controversial, because it involves some issues that go beyond privacy, including who has the right to collect this information and who has the right to apply this information. Flora Sapio pointed out how these problems are largely left to the private sector, and how the law should regulated them should be further explored. So far, this problem has not yet been resolved in the 28 countries of the European Union.
Flora Sapio said that data has largely become a form of social wealth. This kind of social wealth is based on data analysis. Such social wealth has so far only existed in the private sector, but it has to a large extent influenced the public sector. Flora Sapio believes that this is a very central issue, and the private sector can greatly influence public choice. For example, in Britain’s withdrawal from the European Union, many procedures are regulated by law, but the broader process was influenced by data algorithms. Basically, it was driven by data algorithms and analysis. This may be the most controversial example. Moreover, at the legal level in Europe, very little legislation covers the issue just mentioned.
How Does Credit Repair Work in Europe?
Credit repair in the United States is an independent industry, but it is relatively new in Europe. The whole system exists to a large extent in the private sector. This involves some normative principles within the EU. The state, as the maker of legal norms, does not directly interfere with the operation of the market. For example, in the field of consumer credit, this work mainly relies on credit rating agencies, and the business covers almost all of Europe. When it rises to the level of regulation, the state cares more about personal privacy and the management of this data. This is related to the quality of data and the collection of data, which are regulated by agreements between consumers and credit agencies.
“The use of standardized information to correct wrong credit information does not exist in the law” said Flora Sapio. Credit rating agencies create personal consumer profiles for consumers, gathering information about consumers on social networks, data from mobile and online payments. These data generally speaking belongs to individuals and to private actors. Negative information is stored in data systems for more or less long periods of time, which do not depend on the consent of consumers.
Flora Sapio said that in practice, negative information may be shared, and even if the consumer corrects his behavior, this information may remain on the record, which becomes a factor that is detrimental to consumers. How to solve this problem? Flora Sapio pointed out that credit restoration in Europe is not as prevalent in the United States. In general, the first step is for consumers to get in touch with relevant agencies, correct or update information, but this can be difficult in pratice. Another way is to rely on traditional mechanisms of dispute resolution to obtain an order and renew credit scores and credit records.
Flora Sapio emphasized that there are also significant differences within Europe. For example, there is a wide difference between the United Kingdom and civil law countries. In the UK, various types of credit records are used more widely than in other civil law countries. In the EU, credit repair as a mechanism itself is still relatively new, and less developed than in the United States.