Financial services companies are beginning to tap the rich store of personal data people leave about themselves on social networks, at least according to one security researcher's observation. If or when such data collection begins happening on a wide scale it will have security, privacy and possibly regulatory implications.
Such data mining activities also provide a glimpse into the type of analytics that may soon be available from third parties.
Security firm AVG's Chief Research Scientist Roger Thompson describes a recent encounter he had with his credit card company in a blog post. His credit card had been suspended when purchases made during a recent trip to London triggered the card's fraud detection system.
A Facebook Friend
In order to get it reinstated, the credit card company asked him questions about his daughter-in-law after asking the usual security questions such as the last four digits of his social security number and the types of accounts he has with the bank. Specifically the representative asked, according to Thompson, "What age-range would best describe this person and he proceeded to ask me about my daughter-in-law using her maiden name - and she's been married for nine years."
Thompson believes the bank connected his daughter in law to him via Facebook. "We have no connection on any bank accounts, or legal documents and she hasn’t used her maiden name for nine years. I'd have been less suspicious if they'd asked me about her married name. The only place we connect as far as I’m aware is that she's a friend on Facebook," he said. Thompson concludes by saying he doesn’t believe Facebook is selling users' data but that someone else is harvesting it.
Will the FTC Step In?
If such encounters become the norm for consumers, it is highly likely that the Federal Trade Commission and Congress will step in with at least an inquiry. Both the FTC and Congress are currently looking at online behavioral tracking, with an eye to curbing some of the most egregious activities.
At the same time, though, Thompson's post also illustrates the potential use such data can have for financial services companies - and why it is likely they will, if they are not already, try to use such data. A company called Rapleaf is using social data - namely who people's friends are online - to help lenders determine whether that person is a good risk.
"Who you hang around with has empirical implications with how you behave," says Joel Jewitt, Rapleaf's vice president of business development. "This is a new type of information. It's still an evolving science, but the results have been positive." (via Fast Company).
