I agree. Even if by miraculous technology they are able to be effective at extending loans only to good debtors and be ethical with their bad debtors ... is a conversion optimized "Make me a debtor!" button really the kind of incentive society should have?
shame.
However Max and Affirm justify their business, there isn't an algo smart enough to only offer small credit to people who won't get in to trouble. In fact there is a huge incentive to lure people into using credit when they won't be able to handle it. Which is evidenced by almost any consumer credit business in history. Even if they say they won't charge late fees (for now), to play up their ethics, believe they are still going to be monetizing outstanding loans. Businesses like this (payday loan/ small credit / auto title loan / rent-to-own) typically sell their bad debt to recovery agencies and still turn a profit on the interaction. Not to mention Affirm will get a point or 2 from the merchant in all cases, I assume.
shame.
However Max and Affirm justify their business, there isn't an algo smart enough to only offer small credit to people who won't get in to trouble. In fact there is a huge incentive to lure people into using credit when they won't be able to handle it. Which is evidenced by almost any consumer credit business in history. Even if they say they won't charge late fees (for now), to play up their ethics, believe they are still going to be monetizing outstanding loans. Businesses like this (payday loan/ small credit / auto title loan / rent-to-own) typically sell their bad debt to recovery agencies and still turn a profit on the interaction. Not to mention Affirm will get a point or 2 from the merchant in all cases, I assume.
No surprise about the $275M though.