Facebook endured another privacy debacle this week when a security flaw was found, allowing friends to view each other’s private information, including chats and messages. Though the security breech lasted only a few hours, many users are upset that their privacy had been compromised for the second time in less than a month. As Facebook faces formal complaints from a number of consumer advocate groups over privacy concerns and violations, the glitch could not have come at a worse time. With Facebook’s Open Graph rolling out soon, the social networking leader needs to fix all security issues and concerns – or could risk losing users.

In late December 2009, Facebook revamped its privacy settings, allowing users to control exactly how public certain information could be. Users could make all photos private, but allow strangers to view their basic info. The settings even allowed for control over what Wall posts others could see. Prior to this change, privacy settings were based on a user’s network, such as a school, city or employer. It is understandable that as Facebook grows – the network is more than 400 million users strong – security needs to be upgraded. However, security only seems to be weakening, and Open Graph may be a big reason why.

Facebook aims to use Open Graph to socialize the entire Web, enabling users to integrate the site’s features outside of the main Facebook network. Announced last month at the F8 Developer Conference, Open Graph will most likely require users to change their privacy settings every time they connect with a new Web site, especially if they want to maintain as much privacy as possible. Currently, Open Graph partners are Pandora and Yelp, but many more brands expected to be announced in the near future. The process of connecting to a site using Open Graph allows the program to pull information from your profile, and information from your friends’ profiles, too. Although the potential of Open Graph is exciting, it will impact privacy in a big way.

Facebook used to be a simple network with pretty cut and dry privacy controls – if you weren’t friends with someone, they couldn’t see your profile. Now, privacy settings are so complex, even the most seasoned Facebook users can get confused about what they’re sharing and what they’re not. A recent survey by Consumer Reports cited by The New York Times found that “23 percent of Facebook users either did not know the site offered privacy controls or chose not to use them.” To correct this, Facebook needs to make this process simple again, even with a simple opt-in/opt-out button for Open Graph or Connected Profiles. It’s a simple fix, but doing so would satisfy Facebookers and make them feel safe, ensuring growth of the network instead of a major loss of unhappy users.

The addition of Open Graph, as well as the rising number of brands and businesses using Facebook has put the network in a unique position in the social space. Facebook is slowly moving from an individual-focused network to a more brand-focused network. Facebook was built on human connection, and the social giant is now trying to figure out how to incorporate brands into its network. In the meantime, it’s clear that Facebook needs to pay attention to what users want and make privacy its biggest focus.

Feature image from Hongkiat.com.