Facebook Requests Customer Data From Major Banks, Raising Privacy Issues

News, Opinion | August 7, 2018 By:

Facebook has asked several large US banks to share detailed financial information about their customers, including card transactions and checking account balances, as part of an effort to offer new services to users.

Dan Goldstein is the president and owner of Page 1 Solutions, a full-service digital marketing agency. He is the also the author of Win with Multi-Channel Digital Marketing. He takes issue with the Facebook requests.

“This is very troubling,” Goldstein said. “It appears that Facebook has not learned its lesson about the importance of user privacy. The banks may be tempted to make this trade, but it will be bad PR, not to mention violations of financial privacy rules, for any who do. This may indicate that it is time for the state and federal regulators to step in and regulate how Facebook manages private user data.”

Goldstein answered some Block Tribune questions:

BLOCK TRIBUNE: Strictly speaking, the request is not illegal, right?

DAN GOLDSTEIN: The request is not illegal. Banks share account and transaction information with other platforms such as Mint.com. The reason this raises concerns is Facebook’s recent spat of privacy scandals.

BLOCK TRIBUNE: How many banks will comply, in your estimate?
DAN GOLDSTEIN:  I suspect most banks will be reluctant to share the requested information with Facebook at this time. Eventually, Facebook may be able to persuade banks to participate in this program when the privacy scandals are not front and center in the news. However, I suspect most banks will want to have comprehensive assurances that their customers’ financial data will remain private before sharing it with Facebook.
BLOCK TRIBUNE:  What kind of services do you think Facebook will institute?
DAN GOLDSTEIN: Facebook, like other large tech companies is looking at multiple ways to become more central in its customers’ lives. Financial data, health data, and other personal data like appointments and schedules are probably high on the list of the types of things Facebook wants to be able to access and present to consumers. Facebook wants its applications to become indispensable to their users. In order to get there, however, it will need to overcome the recent shadow of doubt brought on by the Cambridge Analytica scandal and the recent news that followed on its heels.
BLOCK TRIBUNE: There is talk about consumers being able to financially benefit from sharing their data. Is this a perfect test case for that notion? 
DAN GOLDSTEIN: Consumers may benefit from having all of their financial data in one easy to use place. The question is whether Facebook (or Facebook Messenger) is the right place for this.
BLOCK TRIBUNE:  What sort of safeguards are needed in the market to ensure that data isn’t shared without permission?
DAN GOLDSTEIN: The starting point is that Facebook has to demonstrate that it has respect for user privacy. This news, coming so closely on the heels of the recent data privacy scandals comes at a bad time and throws further doubt on Facebook’s credibility. Ultimately, Facebook may not be able to provide satisfactory assurances unless they commit to more substantial cybersecurity protections similar to what banks and healthcare providers have started to adopt. A good example of this might be two factor authentication. Right now, Facebook user accounts are not very secure as user accounts seem to be hacked on a consistent basis. That has to change if Facebook wants consumers to trust it with highly confidential information.
BLOCK TRIBUNE: Do you think any third parties will object to Facebook’s request and potentially go to court to block it?

DAN GOLDSTEIN: I am sure that privacy advocates will take a close look at it. Whether it results in litigation will depend on whether the banks agree to share their customers’ financial data with Facebook.