Yes, I know. That headline alone will cause anti-regulation conservatives to burst an artery and libertarians to swallow their tongues. Overall, our government does a poor job regulating technology, in large part because many of our elected representatives are still searching for the "any" key (or having their aides do it for them). But hear me out.
Last weekend Chicago-Kent College of Law professor Lori Andrews published an essay in the New York Times titled "Facebook Is Using You" -- to which any Web 2.0-savvy person would reply, "well, duh."
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Her point, though, is worth exploring. As pressure to find new revenue streams increases on a post-IPO Facebook, it's very likely to use its treasure trove of data for more than just delivering targeted ads.
In the financial biz this is called "behavioral scoring," and it's already in wide use. Andrews gives as an example a PR pro in Atlanta named Kevin Johnson. In 2009 his American Express card limit was slashed from $10,800 to $3,800 overnight. Why? Because he shopped at a place whose other customers were deemed bad credit risks. That really is the reason Amex gave him for the change.
Johnson, who now runs a website called NewCreditRules, suspects it was because he happened to use his Amex card at a nearby Wal-Mart (yet another excellent reason to never shop at Wal-Mart).
Think this can't happen with Facebook? It already is. BetaBeat's Adrianne Jeffries wrote a great piece about how online banks are using data from customers' social media profiles to see if they qualify for loans. If your friends are deadbeats, you might not get that low-interest mortgage you're shopping for. Don't have a Facebook or Twitter account? Sorry, you can't apply.
