How Bolsonaro loads the dice ahead of the presidential runoff

Documents obtained by The Brazilian Report show that bank representatives have access to private data from millions of low-income voters and are offering them payroll deduction loans. Part of Jair Bolsonaro's re-election strategy, these loans can easily become debt traps

Ad offering payroll deduction loans for Auxílio Brasil beneficiaries. Photo: Evandro Leal/Agência Enquadrar/Folhapress

President Jair Bolsonaro reached the runoff stage of the presidential race emboldened by an electoral performance (over 43 percent of the vote) that eclipsed what most pollsters had forecast, but also facing an uphill battle to avoid becoming the first sitting Brazilian president to fail to win re-election. Former President Luiz Inácio Lula da Silva, his challenger, obtained over 48 percent of the first-round votes and has far less terrain to cover in order to win a majority in the runoff.

But Mr. Bolsonaro is stacking the deck in his favor by using his control of the public purse to an unprecedented extent. Since October 3, when the runoff campaign began, his administration has announced eight new initiatives granting or increasing social benefits — an average of one every two and a half days. 

Since the first round of votes, the government has added almost 500,000 families to cash-transfer schemes, launched programs to renegotiate debts and offer payroll deduction loans, and brought benefit rollouts forward. That doesn’t even include the so-called “Desperation Bill,” which bumped payments of Auxílio Brasil benefits up by 50 percent in August, lasting until the end of the year.

One of the most controversial measures, however, was allowing Auxílio Brasil beneficiaries to take out payroll deduction loans. The cash-transfer scheme targets Brazil’s poorest, and recipients have been offered the opportunity to commit up to 40 percent of their monthly revenue to loans. 

Multiple economists have warned that, despite the immediate financial relief these loans can provide, they may easily become debt traps, with annual rates of up to 51.1 percent a year.

The Brazilian Report understands that banking correspondents (third-party agents employed by financial institutions to provide and sell services to customers) were given massive amounts of data on Auxílio Brasil beneficiaries for the purposes of actively proposing payroll deduction loans.

The Brazilian Report also verified that one such banking correspondent alone had the private data of 3.7 million people — or 20 percent of all Auxílio Brasil beneficiaries — from 21 of Brazil’s 27 states. The Brazilian Report cross-checked entries with public databases and contacted multiple people on the list to check if the information was valid. Every single one was a match.

Companies are not allowed to store or use data from citizens without their explicit consent, meaning the revelation may constitute a massive violation of Brazil’s data protection laws.

The list of information in their custody includes people’s full address, mobile and home numbers, birthday, how much they get from benefits every month, their enrollment number on the government’s NIS welfare database, and their public healthcare ID numbers. 

“I’ve been working with this for 20 years, and I’ve never seen anything like it,” the banking correspondent told us confidentially, out of fear of retribution from the government. “We usually have access to data from people who pre-register themselves for credit, but they never have to inform their NIS number or address. Clearly, there was a leak of official data.”

The data on each individual is so broad and specific that, according to experts consulted by The Brazilian Report, they in all likelihood came from the federal government itself. Municipalities only have limited access to people’s details, far less than the wealth of information contained in the spreadsheets.

Such data is in the custody of the Citizenship Ministry, state-owned bank Caixa — which runs social programs — and Dataprev, the public firm in charge of the monthly payroll of all pensioners and beneficiaries of welfare programs. As a result, Dataprev handles a huge amount of data on the Brazilian population.

They denied any data breach or malicious leak.

Exclusivo: Vazamento mostra que dados de beneficiários do Auxílio Brasil foram usados para venda de consignado
The entries were blurred to protect the data of the persons concerned.

Ione Amorim, a spokesperson for consumer protection advocacy group Idec, says the sharing of data from Auxílio Brasil beneficiaries is “alarming” and “must be immediately investigated by authorities.”

“If private data belonging to almost 4 million Brazilians is in the power of a single banking correspondent, it is legitimate to imagine that it is freely circulating without any protection from fraudsters, scammers, and even for electoral use,” she tells The Brazilian Report

“There’s a lot of power in being able to get in touch with millions of people who desperately need money.”

Political scientist Alberto Carlos Almeida, who is close to Lula’s Workers’ Party, published on Twitter that he learned beneficiaries of welfare programs are receiving messages informing that Mr. Bolsonaro’s opponent, former President Luiz Inácio Lula da Silva, would slash Auxílio Brasil benefits if elected. 

“If this happened with the use of official data, it is an electoral crime,” Mr. Almeida says.

What strengthens the perception of a government data leak is that the spreadsheets containing people’s information were shared before the payroll deduction program had been announced, one source tells us. 

While the policy went into effect on October 11, sources confirm that banking correspondents received the data and have been contacting beneficiaries to offer loans since at least June, either by phone or WhatsApp. 

That is a clear violation of the legislation around the loan program, which prohibits “any active marketing activity, commercial offers, proposals, or advertising aimed at a specific beneficiary or any type of activity aimed at convincing the beneficiary to enter into personal loan contracts.”

Prosecutors from the Federal Accounts Court recommended the suspension of the payroll deduction loan offer this week as it may be intended to “politically interfere with the presidential elections.” The prosecutors want Caixa to explain the timing of its moves, between the first and second rounds of voting.

President Jair Bolsonaro presents his flagship cash-transfer program in São Paulo. Auxílio Brasil is the president's biggest bet for re-election.
President Jair Bolsonaro presents his flagship cash-transfer program in São Paulo. Auxílio Brasil is the president's biggest bet for re-election. [Photo: Isac Nóbrega/PR]

A survey carried out by Idec mapped over 2,000 complaints related to Auxílio Brasil payroll loans until October 19, mostly about the lack of clear information from financial institutions about how to take out said loans.

“People are in such a dire situation that they don’t understand that they are being abused. They think they are being taken care of with the money,” says Ms. Amorim, the Idec spokesperson.

According to Datafolha, a renowned Brazilian pollster, President Bolsonaro’s voting intentions among Auxílio Brasil beneficiaries improved by 7 percentage points since last week, while Lula’s dropped by 6 points among the same demographic. And while Mr. Bolsonaro still trailed Lula in the first round in municipalities where more people depend on social policies, he improved on his 2018 scores.

The Citizenship Ministry stated that it “did not authorize nor carry out any sharing of personal data” with companies that offer credit to Auxílio Brasil beneficiaries. 

“The identification data of registered people and families are confidential and specific sharing, and can be used exclusively for the formulation and management of public policies and for carrying out studies and research.” Moreover, the ministry adds that it has no knowledge of a possible data leak.

Caixa said it follows “strict security rules and does not share program data with third parties.” Dataprev didn’t respond to a request for information.