Other people's business

RSS

Is social media data in finance a double-edged sword?

The NSA saga should also make us wary of how private companies are using our personal data.

New Statesman
In the wake of the NSA scandal all the focus is on governments, but what about corporations? Photograph: Getty Images.

The revelation that US intelligence agencies are accessing billions of private emails and messages posted on (private) social networks has sparked indignation across the world. The assumption that our information would remain private never lied on strong grounds, but the official confirmation following the Snowden saga has brought new ethical dilemmas into the public sphere, not previously encountered before the advent of the digital era.

The violation of privacy is the biggest issue of all in this story and we might just be seeing the beginning of it as it appears that it is not only the US government who is opening our letters and spying in our drawers. Indeed, the NSA seems to be just the tip of the iceberg of secretive gathering of private data on a global scale.

But what about the use of the information we decide to make public? How do we feel about a third party collecting and analysing information that we have decided to share openly in the first place? And how do we feel about that information being used by the private sector and for commercial purposes?

The increasing use of social media data in the financial services is a good test example. The insurance industry, for instance, has openly publicised how it uses social media as a way of detecting fraud. A few years ago, Manulife was in the news for winning a case against a Canadian employee of IBM on long-term sick leave for depression who posted Facebook photos from the beach and at a Chippendales show. Widespread use of social media continues to allow insurers to spot whiplash victims boasting from their latest ski weekend or laptops claimed to be stolen lingering in the victim’s EBay account.

But the ever-deepening transition into the digital economy may end up generating some drawbacks for companies. Privacy regulations are evolving quickly and peeping on customers’ social data may soon backfire on companies and affect their own reputation. Indeed, how would consumers react if they knew certain companies were particularly active in using social media? Would well-intentioned consumers not care about it given that they have nothing to hide? Or indeed would they still dislike the idea of being under the watch of those who should be providing a service to them?

The list could also be extended to other aspects related to the use of social media: the protection of customer information from cyber attacks,  online etiquette (do we like our car insurer congratulating us on our birthday?) and the sharing of personal data with partnering companies.

As the digital world evolves, companies need to care not only for the opportunities but for the responsibilities that come with the use of social media data.