Ever wonder who’s checking your Facebook profile? Sure, there are probably the old standbys, like your high-school crush and your nosy co-worker, but you should be aware that there might be someone else checking you out: your banker. Financial institutions of all stripes have been scouring social-networking sites since the days when MySpace was all the rage; now they troll Facebook, Twitter and blogs to find out more about their customers. Don’t be surprised if soon they take the information they’ve found about you and use it to determine your creditworthiness.
That’s exactly what the Lending Club ??? a California-based peer-to-peer online lender ??? is doing. The company gives people in need of anywhere between $1,000 and $25,000 a place to raise cash from online investors. Because these transactions are all digital, the company takes some unusual steps to try to sniff out unscrupulous borrowers. Rob Garcia, the Lending Club’s senior director of product strategy, says that besides the usual back-ground and credit checks, they look at publicly available information to make sure everything checks out. ‘We use what’s online to reduce the risk of fraud,’ he says. While Garcia won’t divulge exactly what his company looks for, he says it’s as basic as matching information on an application to information on a Facebook profile. If there’s a discrepancy, more questions need to be asked.
Experts say they’re not aware of big banks and credit card companies that are using online data to determine who to lend to ??? yet. ‘Inevitably, it will become more common,’ says Brian Bowman, a lawyer and privacy expert with Winnipeg’s Pitblado LLP. New consent forms will mention something about social-networking data, so if you sign on the dotted line, all your public information will be fair game. Some experts have even suggested that financial institutions may want to check the credit histories of people in your online network to help determine your creditworthiness, with the idea being that people tend to share the same consumer habits as their peers.
In the insurance industry, using information from social-networking sites has already become commonplace. Bowman says there’s a developing body of case law around people who have claimed personal injury for insurance and then, when they’re supposed to be bedridden, have posted photos of themselves doing something physical, like skiing. ‘That’s being admitted in court with increasing frequency,’ he says. Industry insiders are now warning that victims of burglaries might have their insurance claims rejected if they had revealed that they weren’t at home on Twitter or on the location-based social network, Foursquare.
However, marketing remains the main reason financial institutions and other companies are scouring social-networking sites. Joel Jewitt, vice-president of RapLeaf, a San Francisco???based company that monitors social-media networks for companies, says financial institutions are always trying to figure out how to send the right message to the right people. His company gathers data from the Internet ??? gender, age and other demographic information. Banks can use that information to create specific ads or products for niche groups of people.
A Fredericton-based company, Radian6, uses social-media data in a different way. Their computer programs track what people are saying about organizations across the social-media landscape. Tweet something angry about a bank’s customer service and there’s a good chance they’ll get that message seconds later. ‘You can drill down to specific posts,’ says vice-president Dave Alston. The financial institution can use that information for marketing purposes, or they can respond directly to the Tweet, Facebook post or blog entry.
According to Mathew Ingram, a Toronto-based journalist and social-media expert, banks may want to examine every client’s online data to learn more about them, but it would be an enormous task. ‘It’s difficult to get much detail,’ he says. ‘Someone using a smiley face emoticon is about as close as we can get to saying whether a tweet was happy or sad.’ And companies who regularly deny insurance coverage based on social-media data could risk public backlash.
Still, that doesn’t mean that consumers should be complacent. Remember that banks will use this information any way they want ??? and it may not be in your favour. There’s only one way to guarantee your bank’s not reading your comments: make them private ??? or better yet, keep them offline.