Banks mining social media sites for personal info

February 17, 2010 12:00:00 AM PST
Web users are becoming increasinly aware that companies are secretly gathering and selling the information they post on social sites like Facebook and Twitter. But now, banks may also be judging them based on their social network profile.

For the first time, banks can look pretty deeply into your private life by looking at your Facebook or other social media page and they may even consider your network of friends. The question is, "Will banks use your online persona to decide whether to give you credit?"

Personal finance expert Erica Sandberg is all over the Internet. Anyone can read about her on Facebook or LinkedIn. That's why she's very careful what she writes.

"It's very similar to standing in the middle of the park and screaming. Do you want to scream good things or do you want to scream crazy things?" she says.

Sandberg says scream good things and hope the "friends" in your network are solid citizens because it may affect your ability to get credit.

"You're talking about the debt you have or you're not going to pay your bills. That information is out there and it could be used for you or it could be used maybe against you," she says.

Companies like RapLeaf of San Francisco have been quietly gathering information you post publicly on sites like Twitter, Facebook and MySpace. RapLeaf has now created "social profiles" on 387 million unwitting consumers and sold them to lots of companies, including banks.

"As far as how many banks are using it, they're not saying," Sandberg says. "They're not saying and the banks aren't saying so, and they don't have to."

Privacy advocates like Pam Dixon wonder what banks are doing with this chatter.

"Is this information being used for credit purposes at all?" she asks. "We don't know the answer to that question."

RapLeaf spokesman Joel Jewitt did not want to appear on camera, but he told 7 On Your Side that banks use the information solely for marketing and not to determine your credit risk.

RapLeaf researches not only potential customer, but their network of online friends. The company website says RapLeaf will research the demographic profiles and social media activity of a customer's friends. The idea is that "groups of friends behave alike."

Jewitt says banks use this information to identify potentially good customers. But, if you have deadbeat friends, he says it won't be used against you.

"This whole idea of people in your network having an impact on your ability to get a credit card or your ability to get a car loan, it kind of blows your mind," he says.

It surprised Facebook users like Kevin Charchenko too.

"That this could be used to render a lending decision for me or determine my credit score or had some affect on my buying decisions, that's weird," he says.

7 On Your Side asked major banks about this. Chase, Wells Fargo, Citibank and Capital One all said they do not use social profiles for any purpose. Bank of America declined to comment or provide any statement.

One financial institution is not shy about using social data.

"Social media and social networking provides a wealth of information that can be used in many ways," says Robert Garcia with Lending Club.

The Lending Club, a peer-to-peer lender based in Redwood City, uses this data for marketing and to help uncover potential fraud on loan applications. But, it says social chatter won't affect loan approval.

"We don't use any social media, social chatter or social networking information to determine the creditworthiness of a person," says Rob Garcia.

The privacy forum offers consumers this tip: The way companies find your social network page is through the email address you used to sign up for the page.

So, you may want to think about it before you give your bank the same e-mail. Try using a different one.