To say its been a rough two week stretch for the Facebook brand and its founder, international icon Mark Zuckerberg, would be an understatement. In mid-March it was discovered that the highly-recognizable social networking platform allowed a researcher from Cambridge Analytica, a political consulting firm that employs data mining, brokerage, and analysis practices for the benefit of political candidates primarily in the United States and United Kingdom, to use data collected from roughly 50 million Facebook users without their consent. These findings have since propelled the company into a downward spiral, as big-name celebrities delete their accounts and powerful companies including Mozilla, SpaceX, Tesla, and even Playboy continue to suspend their relationships and pull their advertisements off of the site. These moves have contributed to a monumental stock plunge (currently at 18% and still falling) for the company, and a market value hit of around $80 billion, with Zuckerberg’s personal net worth falling approximately $15 billion in just a matter of days. Although this set of recent claims against Facebook have dominated the international headlines of late, this is not the lone scandal the California-based company is currently mired in. Reports from online news publication The Intercept have indicated that the United States Immigration and Customs Enforcement (ICE), a bureau of the U.S. Department of Homeland Security, has used Facebook data including login details, email addresses and phone numbers, and IP addresses, to track down and subsequently deport illegal immigrants, activity that many believe Facebook officials continue to be actively involved in. Unfortunately, these proceedings that toe the line of unethical practices have become somewhat run of the mill for conglomerates such as Facebook and Amazon who have long been amassing excessive amounts of personal data about their customers and users for their respective benefit. What each of the latest scandals has now done however is drawn increased scrutiny to a tech industry already riddled with questions about transparency, privacy, and user control from both a financial and social perspective.
While Zuckerberg has come forward to admit to the failures of his company in protecting user data and in breaching the trust of their customers, the lack of action taken by a company with advanced knowledge of the ongoing saga with Cambridge Analytica is difficult to overlook. Add that to the worry from investors who believe that Facebook and other social marketplaces could face strict regulations in the near future due to the increasing prevalence of large-scale privacy breaches throughout the sector, developments that could significantly thwart the growth and continued development of these entities. In addition to the losses already accruing for the Facebook group, it is believed that the Federal Trade Commission could inflict additional fines in the billion-dollar range against the company for the breach of a consent agreement for safeguarding of personal information dating back to 2011. Bloomberg writes “The agency could fine Facebook up to $40,000 per violation per day — which could add up quickly with millions of users involved — if it finds the social media giant broke its earlier promises to protect user data, they say” (Shields & Quinn, 2018). While Facebook representatives have denied any violations of the agreement, they have already made profound edits to their on-site/on-app privacy options, now consolidating all of these options in a lone, more convenient location.
So what exactly do these developments mean for all of us non-investors? More than you might think. The article “What the Facebook data scandal means for your finances”, cited in BSA News Now on March 29th, 2018 discusses how a lack of data security can make anyone vulnerable to financial crime, both in the digital and physical sense. A frightening fact presented in this article reads “research published by the home security company ADT found that three-quarters of burglars now use Facebook or Twitter to target properties to rob” (Prosser, 2018). As more and more information is shared on social media sites through photos, text and other means, the more susceptible individuals become to taking losses. Similar methods to those employed by Cambridge Analytica for data-centered profiling of users have been used in the past to harvest personal data that is then exploited by cyber criminals. Writer David Prosser provides examples of common practices in this regard, writing that in cases where you are asked to provide your telephone number, your number could unknowingly be used to contact premium-rate telephone numbers. He continues, writing that “in other cases, fraudsters have impersonated well-known brands to launch fake promotions that harvest sensitive data or invite people to change passwords with companies with which they have genuine accounts; this information is then used for fraud” (Prosser, 2018). While these situations are often due to the sharing of unnecessary information or falling victim to fairly-avoidable ploys, data leaks are often outside of the control of the individual, as personal records are maintained by certain companies (i.e. mortgage companies, electoral campaign registration sites, etc.) and can be exploited in cyber attacks.
In the finance industry, more and more financial institutions continue to turn to online and mobile services, saving you a trip to your local bank by allowing you to manage your finances at home or on the go, but also putting you at an increased security risk. While some banks boost their login security by requiring fingerprint confirmation to use their app, others only ask for passwords, many of which can be “auto-saved” to a respective device for quicker login. It goes without saying that this puts individuals at increased risk – as if passwords weren’t already simple enough for cyber criminals to crack, auto-saving them to your device is the equivalent of sending a fraduster a personal check for all of the funds in your bank account. Money transfer apps such as Paypal and Venmo can also be hacked into by criminals, giving them access to your bank accounts, card(s) on file, as well as the email addresses and telephone numbers of your friends and family, in addition to your business associates. While the growth of technology for both business and pleasure have undoubtedly shaped the world as we know it in 2018, it has also posed increased risks to those who fail to use these tools in a secure manner. Thus there are many lessons to be learned through the Facebook scandal, and if the proper practices are undertaken by both individuals and companies to protect themselves from cyber-crime as a result, some good may come out of the saga after all is said and done.
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