Facebook FTC Complaint: Insurers Should Distance Themselves From Exploitative Practices
Facebook is in the news with new allegations that it is inappropriately using member information for commercial purposes. Insurance carriers promoting their presence on the social networking platform may want to distance themselves from practices which may be exploitative and reputation-damaging.Many observers have noted that social media turns normal privacy concerns upside down: on sites such as Facebook users volunteer personal information, often to be shared widely. However, Facebook has features that allow users to limit access to their "friends" or subsets of friends. Now, in a letter addressed to the Federal Trade Commission (FTC) Facebook has been accused by several privacy and consumer protection organizations of surreptitiously using member information for profit. My InformationWeek colleague Alison Diana reports:
"Facebook continues to manipulate the settings of users and its own privacy policy so that it can take personal information provided by users for a limited purpose and make it widely available for a commercial purpose," said the complaint letter to Congress. "In fact, this complaint also speaks to a growing concern about the ability of the FTC to protect American consumers as new business practices emerge."If the allegations are true, Facebook's back-office machinations resemble credit card companies' shifting of terms to sneakily take advantage of users. In the wake of the financial crisis, when trust in business is at a low ebb, Facebook risks severe damage to its reputation, potentially negating the gains it has enjoyed from leveraging user information - or worse. Chances are that Facebook will respond by adopting a more transparent privacy policy, perhaps also engaging some kind of ombudsman to serve as an intermediary to users.
But Facebook's problem is potentially also a problem for other companies, insurance companies included, who use the platform to engage with customers. Prominent insurance users of the platform have adopted the best practice of not using Facebook or other social media sites to directly advertise products or transact business. To emphasize that more respectful distance from direct commercial conversations, they may want to explicitly state their disapproval of Facebook's exploitation of user information, if the allegations are demonstrated to be true. Insurers can gain from participating in Facebook, but as commercial concerns, they must take care not to be tainted with commercial abuses of the platform.Prominent insurance users of the platform have adopted the best practice of not using Facebook or other social media sites to directly advertise products or transact business. To emphasize that more respectful distance from direct commercial conversations, they may want to explicitly state their disapproval of Facebook's exploitation of user information, if the allegations are demonstrated to be true.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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