Financial Risks of Social Networking

There has been a huge spurt in the social networking sites and the number of people addicted to it. If you just look at the Facebook statistics, it is mind boggling, check the screen-shot below

Facebook has more than 300 million active user (note that these stats might be a bit out of date since these are not dynamically updated). It is also estimated that young people are more attracted towards these social networking sites, as indicated below

These networking sites are great, but with the number of users growing enormously, the end-user is getting exposed to so many risks. It is growing like a jungle, where at each turn, you may encounter someone sitting with a trap to get on to you.

How many user, who subscribe to Twitter or Facebook actually read the privacy policy while signing-up? As an example, Twitter recently updated its privacy policies and I doubt any of the current user even knew about it. (Here's a link to the updated policy and a link to the old policy.) The twitter policy is way much simpler and easier to understand than say Facebook’s policy. It is extremely difficult to wade through this mumbo-jumbo of legal terms, so probably even if someone brave enough tries to makes sense of it, will fall flat on his/her face.

You would think, why someone should actually read or bother about these policies. Google has warned about privacy issues on social web in a paper [PDF] presented at the Web 2.0 Security and Privacy 2009 workshop.

There are multiple aspects to the risks associated with social networking sites and privacy is just one of them. The risks ranges from someone hacking into your profiles to the risk of infantilizing the human mind.

One of the significant aspects of privacy on such websites like Twitter is the website utilizing the data generated by their users. There is absolutely nothing from legal standpoint to prevent this usage. These types of applications are not that far-fetched, given reports of tools to analyze someone's social network and assess their credit worthiness ("Rapleaf") or psychological profile ("TweetPsych").

But how would these lead to financial losses (which is the main focus of this post)? Well these social sites can lead to huge financial losses to the users by

• Making you loose your job, similar to Heather Armstrong or @theconner
• Making you loose your insurance benefits similar to Nathalie Blanchard.
• Data misuse after hacking your personal information including degrading your credit rating.
• Making you have legal liabilities for using trademarks with-out following the rules. You may use some trade-mark symbols/names into your own merchandise (like this) or your website.

So it is extremely important to keep your eyes open about these risks when interacting socially. Any data that leaves your computer can come back to haunt you.