There is a powerful new ally in the battle against online fraud and identity theft – social media. Even the credit bureaus are using this tool to research the credit-worthiness and validity of consumers, alongside companies like EBay, Paypal, and Intuit. Equifax and Experian are running trials to see if social media posts can help dissuade fraud, verify identities, and even see if consumers are lying about their financial situation.
Every day hundreds of millions, if not billions, of people use social media sites like Facebook, Pinterest, Twitter, etc. to share sensitive personal information through user profiles, public postings, and uploaded pictures. They even leave an online footprint of what sites they’ve visited and what comments they’ve made. This information has always been incredibly valuable to online data mining companies who record and categorize consumer information, and resell it to companies who use it for marketing.
But this information is also useful in catching fraudsters. Fake identities, online scams, and Internet fraud cost retailers $3.5 billion last year, according to CyberSource Corp. The problem is so bad that EBay sets aside $580 million, or 4.1% of their net revenue, to insure fraudulent transactions and loan losses last year, according to a Bloomberg article.
Now, even the credit bureaus are experimenting with social media as a tool to verify identity, cross-referencing personal information versus what is reported to make sure it’s accurate – and dissuade scammers.
Some see this as a gray area – another invasion of privacy in an increasingly digital world. Consumer advocates say that social media sites don’t do enough to protect user data, and the U.S. Consumer Financial Protection Bureau and Federal Trade Commission are looking into potential violations by debt collectors who use misuse social media.
Every time you sign in to another website through Facebook, for example, you automatically allow all of your personal information to be transferred to the new website and stored – or sold – as public consumer data.
There were concerns when Equifax teamed up with Federal and State governments to help screen potential benefit recipients for eligibility. The bureau is asked to verify a person’s name, age, date of birth, state of residence, income level, and criminal record, all areas where data from social media sites can be of assistance.
The encroachment into personal domain – or smart use of publicly-volunteered information, depending on who you ask, goes further: companies are using social media as a human resources tool to glimpse the real life of potential new hires, and debt collectors are rounding up data to help hound defaulters. People regularly document photos and posts about their new car, their employment status, their weekend in Vegas, etc. – all fodder for debt collectors and credit bureaus.
At it’s highest and best use, social media public data can help the credit bureaus combat online crimes by cross-referencing identities and locations, and flagging out-of-the-ordinary spending behavior caused by identity theft or fraud.
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What do you think about your social media data being used by the credit bureaus? Should it be allowed? We’d love to hear your opinion.
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