Wonga are blinding critics with science

The payday loan company shows off about its algorithm, but lends to the same vulnerable people.

I read Michael Brooks' article, Doing Science the Wonga Way, with great interest.

I have had the algorithm Wonga uses to distinguish between applicants explained to me, and it is fascinating. It makes the most of the fact that the internet is replete with thousands of pieces of information about us that, in aggregate, paint a reasonable picture of who we are. More importantly for Wonga, they also paint a picture of how creditworthy we might be. It doesn't take this lightly: I've been told it uses 6-8000 data points about the each of the people it checks.

The problem was that I only had the algorithm explained to me after its accuracy was seriously put in to question.

Wonga has a weekly survey of people who they consider to be good customers, and they brag about them to journalists. When the Guardian's Amelia Gentleman interviewed Errol Damelin, the chief executive of Wonga, he and his team had a chance to show that their model worked. When they put names of potential customers through their high-tech filters, the system ought to tell them whether they would be good customers. They would then only lend if it would be responsible to. After all, Wonga says that it turns away two-thirds of applicants.

Rather than the "web-savvy young professionals" that the company says that it lends to, one of the "good customers" on their weekly survey was Susan, an unemployed former nurse dependent on disability benefits. She uses the loans she receives from Wonga to buy food when she is short of cash. In fact, at the time of the Guardian interview, she had taken out 6 loans with Wonga, nearly double the amount of payday loans the average customer takes out (3.5).

We have two options here. Either we can assume Wonga purposefully targets people who are not median income, employed and web-savvy, unlike what they say, or their algorithm doesn't work as well as they say.

In the same interview with the Guardian, John Morwood, Wonga's communications director, said:

Sometimes we will make loans to people on significant benefits, but it is not something we do very frequently. It is very infrequent. I’m not going to say it doesn’t happen.

Dr Brooks is correct to say that the company has enjoyed some fantastic and enviable funding from several organisations. Last time I looked, Wonga were the beneficiaries of £3.7m from Balderton Capital in 2007, £14m from Accel Partners (also investors in Facebook) in 2009, then £73m from Oak Investment Partners, Meritech Partners and the Wellcome Trust.

I can't be certain, but my assumption is that at least some of these backers are interested in Wonga as an example of good science put into action by business, and aren't particularly interested in funding legal loansharking.

But Wonga's algorithm clearly doesn't alter the fundamentals of their business as much as they claim. Even with their flashy, investor-attracting scientific background, they still lend to people whose custom they admit they ought not to take.

Wonga itself is either misusing its own system to justify lending to people who should be served by less expensive lenders such as credit unions (which I think payday lenders should be obliged to advertise to low-income customers), or its algorithm needs a lot more work than it says.

As it stands, if the system confuses repeat borrowers who are unemployed and on benefits to buy food for people who are middle class, have bank accounts, are in full time employment and need the cash for minor financial shocks here and there, then there is a major issue.

Photograph: Getty Images

Carl Packman is a writer, researcher and blogger. He is the author of the forthcoming book Loan Sharks to be released by Searching Finance. He has previously published in the Guardian, Tribune Magazine, The Philosopher's Magazine and the International Journal for Žižek Studies.
 

A National Trust property. Photo: Getty
Show Hide image

The National Trust is right to bring gay history out of the closet

If you want to explore the history of Britain, you can't ignore its LGBT citizens.

Imagine seeing a monument to executed gay men and thinking literally anything other than, “how sad and poignant”. In September, the National Trust unveiled exactly such a memorial at one of their properties in Dorset. Kingston Lacy was once owned by William John Bankes, a man whose sexuality, in nineteenth century Britain, was a capital offence. The NT’s moving tribute to Lacy and so many others persecuted for being queer was deemed a “PC stunt” by the Daily Mail. Tory MP Andrew Bridgen somehow managed to find the monument “totally inappropriate”, adding that he looks to the Church for moral guidance – not the National Trust.

 But let me backtrack. I’m in the darkened vault of the Tower of London where the Crown Jewels are kept. The tour guide has just made a joke about vibrators.

The last time I was here, I was about nine and I was on a day out with my grandma. She made no mention whatsoever of sex toys. I wonder, actually, if this is the closest to this ceremonial bling a joke about vibrators has ever been made. I also wonder if there’s ever been a tour of the Tower of London where the guide – as my one did about fifteen minutes ago – has quite overtly slammed British imperialism. One thing I know for certain though: this is the first ever official LGBTQ tour of the Tower, organised by none other than Historic Royal Palaces – the charity that manages several of the UK’s grandest former homes.

 Earlier, at Traitors’ Gate, me and a tour group of about twenty people were told about Irish republican Roger Casement, who was executed, here, in 1916. Casement was dedicated to speaking out against the atrocities of imperialism, and was rumoured to be gay. But it wasn’t his alleged homosexuality that landed him in this thousand-year-old fortress-turned-prison, rather his involvement in the Easter Rising. King James I though – I later learn – was almost definitely gay or bi, having a number of “favourite” male courtiers. “Favourite” seeming to be a particularly coy seventeenth century euphemism for “gay lover”.

 The tour lasts about an hour and, although at times it seems to be slightly scraping the barrel for queer content, the pure effort of it is nothing short of heroic. The Crown Jewels section focused in on Queen Victoria, and all the anti-gay legislation introduced during her infamously prudish reign. On this tour, her freakishly tiny crown becomes a symbol of oppression rather than a cutesy royal knick-knack. Which, I can only imagine, would have the “gay agenda”-fearing monarchy groupies of middle England in a Faragean frenzy.

 This year marks the fiftieth anniversary of the 1967 Sexual Offences Act, which partially decriminalised (male) gay sex in England and Wales. And with the sheer number of events, like the queer Tower tour, at palaces and historic institutions – from Hampton Court to the British Library – you’d think it was the Queen’s platinum jubilee.

Now for some word association.

 “National Trust”.

 Pensioners? Fruitcake? Dust? Anarchic genderqueer hook-up joint?

 Not so much that last one? Well then, it may come as a surprise that it was the fusty old National Trust, working alongside the National Archives, that recreated a historically accurate covert 1930s London gay bar. For a couple of nights in March this year, Soho’s Freud Café was transformed into “London’s most bohemian rendezvous”, the Caravan club. In a spectacularly and appropriately theatrical evening of incense, cocktails and vintage drag queens, the NT totally nailed the “illegal den of queer iniquity” thing. This was preceded by a historic LGBTQ tour of Soho, which, like the Tower tour, didn’t gloss over the brutality of the British establishment. The Soho tour was rightfully heavy on harrowing stories about police raids on queer venues. In fact, it was through police reports collected by the National Archives that the NT was able to recreate The Caravan (which was shut down by the police in 1934).

Further north in London, another LGBTQ event hosted by the National Trust was “Sutton House Queered”. If the idea of a Tudor manor house in Hackney isn’t surreal enough, in February the grade II listed former home to aristocracy was the setting of a queer art exhibition. Think – richly wood panelled great room containing a painting of Henry VIII in full bondage gear. This was also the debut of the first gender-neutral public toilet in an NT property.

And, in a display of borderline hilarious inevitability, the Daily Mail … raised objections. “Preserve us from a National Trust that’s so achingly right-on”, quacked a Mail headline in December last year, after the NT announced its plans for a series of “Prejudice and Pride” events marking the 50th anniversary of the Sexual Offences Act. This July, the NT came under attack from the Mail, yet again, for outing late aristocrat, Robert Wyndham Ketton-Cremer. Ketton-Cremer left his Norfolk home to the Trust in 1969, and was supposedly outed as gay in a recent film for the “Prejudice and Pride” series. Whether or not the NT’s decision to discuss Ketton-Cremer’s sexuality was ethical, it’s a refreshing sort of controversy: the kind where an old British institution is actually quite blasé about gay sex, and the Mail goes nuts.

 Throughout this year, my inbox has been almost quite alarmingly full of press releases for queer-related events and promotions. From rainbow hummus (yes.) at the Real Greek restaurant, to “Pride at the Palace” at Hampton Court, more than ever, everyone seems to want a slice of the gay action. The Tate Britain’s “Queer British Art” exhibition, which opened in April, showcases a century (1867—1967) of sexually subversive works by LGBTQ artists. Although overwhelmingly male and posh, it’s hard to play down the importance of such a simultaneously harrowing and celebratory retrospective. In one room, A large and imposing portrait of Oscar Wilde stands right next to the actual door to his prison cell in Reading Gaol, where he was imprisoned for the absolute non-crime of “gross indecency”. Even if Britain’s cultural institutions are just playing up to a trend, a very big part of me is into it.

 In July, I went to a panel discussion organised by Opening Doors London, a charity that provides support for older LGBTQ people. A group of queer people who were adults when the Sexual Offences Act was passed spoke about what this anniversary means to them. When I asked panellist Jane Traies, the author of The Lives of Older Lesbians: Sexuality, Identity & the Life Course, what she thought about the likes of the National Trust taking on queer history, she was understandably wary of the possible faddy-ness of it all.

“It’s good, though, that history itself should come out of the closet,” she said.

                                                                                       

Eleanor Margolis is a freelance journalist, whose "Lez Miserable" column appears weekly on the New Statesman website.