I’ve been watching the furor over the RapLeaf controversy for the past couple of days, really struggling over whether or not to weigh in. If you’ve already been following the controversy, drop down to the next subhead, “The RapLeaf Problem” and I’ll cut to the chase. If you haven’t heard about this yet, RapLeaf is a company that offers an online reputation system, similar to the system on eBay in which buyers and sellers can rate their transactions with each other and thereby establish a commercial reputation. The difference with RapLeaf is that it’s independent of any social network. It works by using an email address as the index for aggregating information available on the web attached to that address—what social networks that email address is attached to, blog posts, Amazon wish lists—a whole host of information that creates a pretty compelling profile of the owner of that email address. You might be surprised to plug your email address into RapLeaf and find much of your online life laid bare.

RapLeaf claims to have 50 million email addresses around which it has developed substantial profiles. If you’ve never heard of RapLeaf, it’s one of three venture-backed startups that all in some way tap into RapLeaf’s IP. The other companies include UpScoop which encourages users to search their friend’s activities by entering their email addresses, and TrustFuse, which sells profile data gathered by the other two companies to 3rd party marketers. ZDNet published an article about these three companies, criticizing the sale of profile data and calling into question how RapLeaf builds its profiles. Apparently it takes more than just trawling search engines, and can entail burrowing or masquerading on major social networks and other commercial sites to leverage those system’s internal search tools to flesh out profiles. The social networks in question, like FaceBook, MySpace and LinkedIn, all deny any business partnership that exposes user data to RapLeaf.

“Rapleaf’s Hoffman said that the company finds profiles through the e-mail search at certain sites, including MySpace, LinkedIn, Facebook and Amazon. MySpace, for example, lets visitors find a profile by e-mail address or first and last name. But for other sites, Rapleaf employs a “secret sauce,” according to Hoffman. It’s not always easy either. Hoffman said the company hasn’t figured out how to crack into accessing members on Digg, for example, even though it would like to.”

The controversy really blew up this weekend after some bloggers noticed emails coming from RapLeaf notifying them that someone had searched their email address, and inviting them to return to RapLeaf’s site to “take control” of their profile, which by the way, requires registration and the divulging of more profile data. A few bloggers cried foul, some charging RapLeaf with heinous spamming, Scoble claiming that RapLeaf was selling email addresses to marketers. Pandemonium ensued, and RapLeaf found itself living a WalMart. But RapLeaf is smarter than WalMart and its PR firm Edelman. Much smarter.

RapLeaf followed the crisis management playbook from PR 2.0, Social Media Edition. The CEO wrote a long and involved apology on the RapLeaf Web site, opened it up to comments, and provided links on their post to all the bloggers frothing over the scandal. Radical transparency excellently played.

But something isn’t right here. And let me disclose why I’m struggling over weighing in. First, I know a few investors in RapLeaf that probably won’t be too happy over my spouting off. I don’t know Auren Hoffman, the CEO of RapLeaf, but we’ve met a couple times. Secondly, I’ve certainly had my own business transactions that people could criticize, and I’m not eager to start throwing stones. But there’s something at the core of this issue that I think needs a lot of open discussion and debate.

The RapLeaf Problem
What concerns me about the RapLeaf story is not the selling of email addresses and the scary threat of more spam. Judi Sohn effectively extinguished that flaming chorus . My concern also isn’t solely centered on what Sohn properly criticizes—the mass accumulation and sale of personal profile data to marketers. My concern is over something I haven’t seen anyone address, and which Auren, in his apology for all apparent transgressions, doesn’t address at all. Something that I think effectively demonstrates that Auren is a hell of a lot smarter than many of the people flapping their arms and hyperventilating about this whole debacle.

It’s not the emails. It’s not the profiles. It’s the tantalizing invitation to put your friend’s email addresses into a system to check on their activities or weigh in on their reputation, and in the process update a massive database of the Real social network—the universal web of social connections linked through online identities that transcends any one application. You can have some fun with the paranoid conspiracy potential here—I mean, being able to cross-reference social network links with profiles and queries would be the dream of any mercenary marketer, not to mention any tin pot police state. Hell, AT&T and Verizon have seats at some powerful backroom tables based on the consumer information they have at hand. But even without going into dark ruminations about intent, the simple fact is that RapLeaf is encouraging users to expose trusted information in a way that is purely designed to be exploited for a profit without being transparent about how that profit is made. At minimum, putting in a friend’s email address exposes them to being profiled, packaged up and sold to some faceless third party, including their social associations. And it’s artfully designed to be viral—how else did a small startup gain 50 million email addresses?

What troubles me in this whole debacle is not that it’s sinister, though it is a little dark for my tastes. It’s playing on a number of levels to draw users into a process that seems fundamentally at odds with the social media trend—and ironically, or perhaps cynically, with RapLeaf’s own brand. Both are based on a significant measure of transparency and trust—on leveraging the power of the internet to make more meaningful connections with new people, new friends and new ideas. Having a way to measure reputations in this brave new world is certainly critical. But damn, I don’t want to learn the company behind the reputation software is gathering and selling much more than I thought I was sharing. Such an attitude toward consumers seems right in line with the exploitive trends in business and marketing that social media is trying so hard to overthrow. And quite frankly, it’s not very helpful for marketers either. Instead of finding a proxy like RapLeaf to build dubious profiles of consumers for more efficient targeting, marketers should be focused on, you know, like, actually building meaningful ties with their customer communities. But hey, missing the whole meaning of the biggest trend in a generation goes a long way in explaining why the average life expectancy for a CMO these days is 18 months. It’s natural selection in action.

In some ways this whole kabuki routine is really kind of amazing when you stop to think about it. For all the power and promise of social media, its Trojan Horse could turn out to be a reputation management system. It’s almost poetic.