By Pam Martens and Russ Martens: August 7, 2018 ~
Facebook is beginning to resemble one of those frat boys at a boozy party who keeps asking guys to punch him in the stomach to prove his masculinity. At a time when it’s under scrutiny on multiple continents for sharing its users’ personal information without their consent, it has decided to ask big U.S. banks to share their customers’ financial transaction information with Facebook, according to a report yesterday in the Wall Street Journal.
The Journal reported that “The social-media giant has asked large U.S. 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.”
Three of the banks mentioned, JPMorgan Chase, Citigroup and Wells Fargo, have been serially in trouble with Federal regulators for abusing their customers. The idea that these Wall Street banking behemoths might now partner with Facebook to potentially add financial privacy violations to their roster of misdeeds, or open the door to identity theft, is sure to open fresh Federal probes.
An added commentary on the morality of our times lies in the fact that the shares of Facebook actually spiked on the news, closing the day up 4.45 percent.
According to the quarterly report (10Q) that Facebook filed with the Securities and Exchange Commission (SEC) on July 26, it is being sued in state and federal courts and is in the cross hairs of government investigators “in the United States, Europe, and other jurisdictions.” The company told the SEC this:
“Beginning on March 20, 2018, multiple putative class actions and derivative actions were filed in state and federal courts in the United States and elsewhere against us and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in connection with the misuse of certain data by a developer that shared such data with third parties in violation of our terms and policies, and seeking unspecified damages and injunctive relief. We believe these lawsuits are without merit, and we are vigorously defending them.
“In addition, the events surrounding this misuse of data became the subject of U.S. Federal Trade Commission and other government inquiries in the United States, Europe, and other jurisdictions. It is reasonably possible that some of these actions or inquiries could subject us to substantial losses, although we are currently unable to estimate the amount of such losses.”
The Washington Post reported on July 2 that the SEC, Federal Trade Commission and FBI have joined the Justice Department’s probe into how Cambridge Analytica, a political data harvesting operation that assisted the Trump campaign, was able to acquire tens of millions of pieces of user data from Facebook. (For a deep-dive into Facebook’s data collection practices, read our April 12 article: “Hearings Show Facebook as a Media Company Using Deceptive Technology to Gain Unfair Advertising Advantage.”)
The movie, “Social Network” was released in 2010, focusing on the origins of Facebook and Mark Zuckerberg’s obsession to succeed, even if it meant engaging in questionable practices. Zuckerberg, now CEO of Facebook, had an early motto: “Move fast and break things.” Left in the wake of that motto were friendships, loyalties and ethics.
Zuckerberg has now reached the tender age of 34 years old. His company is publicly traded with a market value of $536 billion as of the close of trading yesterday. Its shares are held in public pensions and mutual funds held in tens of millions of Americans’ 401(k) plans and children’s college tuition plans.
It’s past time for Congress and Federal regulators to be the grownups in the room.