Is Your Bank Reading Your Facebook Updates?

facebook website screenshot

The last week has seen a number of stories published looking at how your social networking activity could be used by financial institutions.

One angle is that some home insurers might raise the premiums they charge to social network users given the increase in location data being used by such services – the thought is that robbers can get an idea of when someone is away from home.!

This issue has been highlighted by the site, which was in fact put together to shine a light on this very problem, although it has also been misrepresented by some media as being the sort of tool a criminal might actually use. What it does do is show how easy it is to get your hands on this data.

The danger is publicly telling people where you are. This is because it leaves one place you’re definitely not… home. So here we are; on one end we’re leaving lights on when we’re going on a holiday, and on the other we’re telling everybody on the internet we’re not home.

Some estimations have put the possible premium increase as much as 10% for those who use social networks, but we’ll have to see which insurers take the plunge first – there could be an interesting backlash against these insurers on the very sites they’re saying are causing the problems.

Mining social network data

Possibly a more interesting story is the mining of social network profiles by financial institutions – so this isn’t just asking on an insurance app whether you’re a social network user and increasing premiums accordingly, this is gathering (or more likely, buying in) vast amounts of data on consumers, their comments, and the company they keep, amongst other things.

SocialMediaToday reports on an ABC News article, banks mining social media sites for personal info:

…due to the wealth of user data available on social media sites like Facebook and Twitter, banks can now have a very detailed and elaborate view on the personal lives of its clients.

The report looks at a company called RapLeaf which aggregates all of this information and then sells it on to the institutions to use in their marketing efforts. They currently hold info on 388 million users.

Credit scoring

The bigger worry is that they could use this information to credit score consumers, although this has so far been denied by those institutions willing to admit to using the data.

There seems to be a simple way to avoid detection from a system such as RapLeaf’s though – use a seperate email address for your banking and social networks. It’s also worth thinking before posting anything that could get you into trouble, such as letting everyone know you’re on holiday for 6 weeks, or before posting about the problems you’re having paying off your huge credit card bill.

It’s worth remembering that this sort of profiling isn’t completely new – companies such as Experian, which use a variety of data sources to get a picture of your life, have been around for a few years, and companies are already using this data to get a better idea about who their best and worst customers are, for tailoring their marketing messages and to find new customers who fit their idea of the “perfect client”.

Of course, the worry is that this data could be used to determine your credit-worthiness and most people hate the idea of that.

Creative Commons License photo credit: Spencer E Holtaway

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