Daily Tech Snippet: Monday, June 29

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• ZestFinance and JD.com announce a joint venture to provide a consumer credit scoring service in China, rivaling Alibaba's offering: The venture, JD-ZestFinance Gaia, will initially be used to assess credit risk and offer installment loans for purchases on JD.com, which has 100 million active customers and generates yearly revenue of $20 billion. The venture intends to eventually offer the credit-analysis service to corporate customers throughout China. JD.com is also making a minority investment in ZestFinance, though the companies would not disclose the size of the investment or the valuation of the start-up. There is a lot of enthusiasm for the data science approach to credit analysis, and venture funding is flowing into this emerging field. The promise is that high-tech tools can give greater depth and detail to the basic principle of banking: know your customer. Start-ups in the field, beside ZestFinance, include Affirm, Earnest, Elevate and LendUp. The start-ups’ methods vary, as do the data sources they tap. But their algorithms sift through data that can include a person’s social-network connections, web-browsing habits, how they fill out online forms and their online purchases. The software looks for patterns and correlations: digital signals that help assess an individual’s willingness and ability to repay. China’s leaders are seeking to stimulate consumer spending to make its economy less dependent on industrial exports. Expanding consumer credit is part of the formula, and the government is allowing private companies, like JD.com, to innovate. JD-ZestFinance Gaia and competitor Sesame Credit, part of Alibaba-affiliated Ant Financial Services Group, hope to use the e-commerce sites' vast swathes of shopping data to turn out a reliable credit risk score.


• This Driver in China Explains How He Is Helping Rip Off Uber: James Li was unhappy with his pay as a security guard in Shanghai so he started driving on weekends for Uber. He’s almost tripled his pay -- in part by scamming the company. Li, an alias since he feared retribution if his real name was made public, is taking advantage of Uber’s efforts to break into the China market. The U.S. car-booking company is spending millions on free rides and driver bonuses, betting the cash will help train China drivers and market Uber services to customers. Instead, people like Li have figured out how to cash in on Uber’s largesse without giving anyone a ride. He’s part of a cottage industry that has developed so drivers can use modified smartphones and software to place fake bookings and trick Uber into paying out cash for phantom trips. While there are no reliable estimates on how prevalent the scams are, interviews with Uber drivers, equipment vendors and reviews of postings on dedicated online forums suggest at least some of the $1 billion that Uber has pledged to spend to expand the service in China this year is being siphoned off by fake bookings. To create a fake trip, an Uber driver has essentially two options, according to drivers interviewed by Bloomberg. The first is a do-it-yourself option where the driver buys a hacked smartphone that can operate with multiple phone numbers and therefore multiple Uber accounts. Drivers use one number to act as a rider and request a lift, and then accept the trip as a driver with another phone number. The second option involves working with other scammers over the Internet. If a driver doesn’t have a hacked phone, he can go into one of several invitation-only online forums and request a fake fare from professional ride-bookers. These bookers are referred to as “nurses” because they use specially tailored software to put an “injection,” or location-specific ride request near the driver. The driver, or “patient,” then makes the trip while the booker monitors remotely, confirms the journey was made and then pays Uber when the trip is complete. The nurse gets a small fee, usually about $1.60, and the reimbursement for the fare from the patient. The driver in turn collects the fare and a driver bonus that can be three times the fare from Uber, which thinks it is building brand awareness by giving away free rides. The drivers interviewed by Bloomberg spoke of a cat-and-mouse game with Uber and the fear of being caught. A recent software upgrade has made it more difficult to successfully game the system, they said.


• Intuit Lays Off 399 Employees In Company Realignment: Intuit has confirmed to TechCrunch that it has laid off 399 people, or just under 5 percent of the company’s roughly 8,000 employees, in a re-alignment of the company. Patrick Barry has also stepped back from leading Demandforce, though he remains an employee of Intuit. In the past year, Intuit’s stock has risen more than 28 percent, and the company is currently worth more than $28 billion based on its market cap. Intuit is best known for its tax preparation services like TurboTax and financial services like QuickBooks. In January the company partnered with Uber and Stripe to help those on-demand workers keep track of their finances. The tools help workers quickly figure out what their tax bills and write-offs will be for work-related expenses. In January, Intuit also bought ZeroPaper, a startup that offers online accounting services for small businesses, as it began to take an interest in Brazil. It also bought a payroll services startup Acrede in December this year.


• The Mouth Is Mightier Than the Pen: New research shows that text-based communications may make individuals sound less intelligent and employable than when the same information is communicated orally. The findings imply that old-fashioned phone conversations or in-person visits may be more effective when trying to impress a prospective employer or, perhaps, close a deal. In the first of a series of experiments presented in the paper, the researchers recruited 18 MBA. candidates from Booth. The students were asked to prepare a brief pitch to a prospective employer — a roughly two-minute proposal that the researchers recorded on video. Separately, the researchers recruited 162 people who were visiting the Museum of Science and Industry in Chicago to evaluate these pitches. Some of these museum-goers watched the video, a second group listened to the audio without watching the video, and a third group read a transcript of the pitch. What the researchers found was that the evaluators who heard the pitches — whether in the audio or video version — “rated the candidates intellect more highly” than those who read the transcript, the paper reported. Those who listened or watched also rated the candidates more likable and, critically, more employable. The results are said to validate and expand upon previous research showing that the cadence and intonation of voice allows listeners to do a better job of gauging a person’s thoughts than the same information communicated in writing.