Admiral has been forced to scrap plans to use Facebook posts to analyse the personalities of car owners and set the price of their insurance after the social media company said the scheme breached its privacy rules.

In an embarrassing U-turn, the insurance firm pulled the product less than two hours before it was due to officially launch on Wednesday. The product, called firstcarquote, was launched later with “reduced functionality”: users can log in to the product with Facebook but it will no longer analyse their data.

Facebook said protecting the privacy of its users was of the “utmost importance” and that it had clear guidelines about how information obtained from the site should be used.

Section 3.15 of Facebook’s platform policy states that the site’s data should not be used to “make decisions about eligibility, including whether to approve or reject an application or how much interest to charge on a loan”.

Admiral and Facebook remain in talks about trying to revive the product, with industry insiders arguing about who was to blame for the last-minute climbdown. Facebook is understood to have known about firstcarquote for months and the product has been operational on the internet for weeks in a test form.

Privacy campaigners welcomed Admiral’s reversal but said that it was only the start of other companies trying to use personal data in a similar way.

Simon Morrissey, head of data and privacy at law firm Lewis Silkin, said: “This is the tip of a very large iceberg that consumers and businesses are increasingly going to encounter. The challenge with these sorts of solutions is that users may find it increasingly difficult to avoid opting in as the financial disadvantage in doing so becomes so significant that users have no other option but to hand over access to their data.”

By Graham Ruddick

See full story at The Guardian