Facebook has blocked plans by an insurer to view young drivers' profiles to help set car insurance premiums.
In a planned trial, insurer Admiral wanted new motorists' permission to look at their posts and likes to judge their safety as a driver.
Were a young driver considered to be low-risk, a discount would be offered.
But on the day of the planned launch, Facebook said that Admiral would not be able to determine discounts on the basis of Facebook posts and likes.
Facebook will allow people to use their accounts to log in to the Admiral app, and for verification purposes, but will not allow the insurer to view users' posts to work out discounts.
"Protecting the privacy of the people on Facebook is of utmost importance to us. We have clear guidelines that prevent information being obtained from Facebook from being used to make decisions about eligibility," said a Facebook spokesman.
"Our understanding is that Admiral will then ask users who sign up to answer questions which will be used to assess their eligibility."
The insurer said its app would now launch with "reduced functionality".
A digital rights group said the move by Facebook should be welcomed as the plan was "intrusive" and "inappropriate".
Jim Killock, executive director of the Open Rights Group, said: "Social networks do not want you to feel inhibited. What should be relevant to financial companies is financial information.
"It is sensible for Facebook to continue to restrict these activities. Insurers and financial companies who are beginning to use social media data need engage in a public discussion about the ethics of these practices, which allow a very intense examination of factors that are entirely non-financial."
Under the planned trial, thought to be the first of its kind in the UK, Admiral was planning to offer a "first car quote" to young motorists - specially aimed at 17 to 21-year-olds - via an app.
It wanted to use computer analysis of likes and posts to make a judgement about the driver's level of risk, aimed at "creating a reputational track record in the absence of a driving history or no claims bonus".
The computer algorithms were set up to consider the driver's social media entries to judge elements such as their level of organisation.
For example, an entry that invited friends to meet up and included a specific time and location suggested a more organised individual who might therefore be less of a risk as a driver.
Dr David Stillwell of Cambridge University, who has developed similar technology, said Facebook posts offer a very accurate picture of someone's personality.
He told BBC Radio 5 live: "Someone who likes bungee jumping or skydiving: they are much more likely to be a sensation-seeking person, and that is the kind of person that you are less likely to want to insure because they are more likely to drive fast."
Under the plan, a car insurance quote would have been offered, taking into account the type of car being driven, where the applicant lives, their age and what the car is being used for.
Following the assessment, the personality test could lead to a discount of between 5% and 15%, Admiral said. The company added that nobody would be given a more expensive quote after the test.
However, the plan did not receive the agreement of Facebook and the launch was delayed at the last minute on Tuesday and pulled on Wednesday.
Now, drivers will be able to log onto the Admiral app via Facebook, as is the case with many other apps, before answering questions from the insurer - all of which could still lead to a discount, but not owing to their Facebook profile.
"Following discussions with Facebook the product is launching with reduced functionality, allowing first time drivers to login using Facebook and share some information to secure a faster, simpler and discounted quote," Admiral said.
It stressed that it did not have access to existing customers' Facebook data and did not hold social media data to set prices for its customers.
Analysis: Leo Kelion, Technology desk editor, BBC News website
It is not hard to understand why Facebook would have had problems with Admiral's scheme, even if the insurance firm's customers had given permission for their posts to be shared.
Facebook makes most of its money from adverts, and tells marketers that it can target their campaigns more efficiently than can be done on other platforms.
In the past it has given the example of how it ensured that videos promoting a fast food chain's new Jalapeno-flavoured chicken sandwich only popped up on the news feeds of users whose posts had previously identified themselves as being both young and spicy food lovers.
Now imagine a private health insurer wanted access to the same kind of data Admiral is seeking and docked its members points for writing about such snacks.
That would give its subscribers an incentive to write fake posts about loving fresh fruit instead.
Then not only would Facebook miss an opportunity to make money by telling the users about the latest calorific treats, but it might also start promoting ads about salads and smoothies to the wrong people too.
Admiral's plan was criticised by Mr Killock of the Open Rights Group, which campaigns to protect the rights to privacy and free speech online.
He said that social media accounts were designed to allow people to be comfortable with being themselves. Access by companies would inhibit this, he said.
"Whether intentional or not, algorithms could perpetuate social biases that are based on race, gender, religion or sexuality," he said.
"Without knowing the criteria for such decisions, how can we appeal against them? Will we start self-censoring our social media out of fear that we will be judged a high risk at some point in the future?"
The kind of judgements that could be made from people's comments and whether they stayed up late were questionable. Mr Killock added.
But Louise Haigh, Labour's shadow minister for the digital economy said: "Other insurers will undoubtedly be using social media data to determine premiums and to market their insurance. Admiral is simply being honest.
"The government has been dragging its feet on the implications around big data, and in the meantime insurers and others will be harvesting data to drive up prices."
A spokesman for the Information Commissioner's Office said: "The law says that the use of personal information must be fair. A key part of that fairness is ensuring that people are informed about how their data will be collected and used.
"Even if personal information is publicly available on a social networking site, companies still have a duty to handle it fairly and comply with the law around data protection."
Similar technology has been in place in Africa, where lenders look at borrowers' social media profiles to assess their creditworthiness.
That is because it is very difficult to obtain adequate data about people, particularly in rural areas, so mobile and web usage are proving useful ways of gathering it.
The latest survey from the AA showed that in the UK young drivers aged 17 to 22 still pay the highest premiums, with the cost of the cheapest comprehensive cover averaging £1,287 a year.
A growing number of insurers are offering considerable discounts to young motorists if they take out a telematics policy. They require "black boxes" to be fitted to their cars to monitor how safely they drive.