While the purpose of social media is largely fun and fellowship - this same information has led to surprising and even harmful implications for many people.  Now, several startups hope to profit from insurance plans to protect your reputation.

Social media has led to a blossoming world of free information available about people. Millions of people have reconnected with old friends.  But at the same time, many people have seen co-workers, employers or police discover things about them that otherwise would have remained a secret.  Privacy might be dead, but that doesn’t mean you can’t do anything about it.  With many people beginning to worry about this loos of privacy, it was inevitable that entrepreneurs would find ways to take advantage of these fears.

ReputationDefender is a new kind of online security service that helps you monitor your reputation on the Web and claims to take actions to make sure that when someone searches for you they see you in the best possible light. ReputationDefender sells four different security products on a monthly subscription basis (MyReputation, MyPrivacy, MyChild, and MyEdge) which lets you monitor information about you across the Web, as well as in semi-private databases, and helps you remove inaccurate information or counter by promoting your own vetted profile.

Taking at look at one of these services, MyChild, you can see how they play off people's fears. ReputationDefender scours the Internet for all references to your child or teen - by name, photography, screen name, or social network profiles - and packages it to you in an easy-to-understand report. Are you worried about bullies? Are you concerned that your teens' friends and peers are posting inappropriate materials online? MyChild searches every public corner (some elements of Facebook and bulletin boards remain very private) of the Internet for traces of your kids. As their advertisements say "If you want to help your teen manage their online reputation, but have felt powerless to do so, ReputationDefender is your answer!"

The extent that ReputationDefender, or similar services like Reputation Repair & Management and ORM - Online Reputation Manager, can actually do anything about erroneous or unflattering information about you varies, but for the most part simply knowing what’s out there is first step to doing something about it. ReputationDefender is seeing strong early demand with about 1.2 million (USD) in revenue last year.  Even in the fourth quarter of 2008, when the economy was falling apart, ReputationDefender had a record quarter which led to ReputationDefender raised $8.65 million from Bessemer Venture Partners and Kleiner Perkins.

Of course, if you don't use Facebook, Bebo, Myspace or similar services than your worries should be low - but while you control what you say, you have little control of what others say.  These reputation services are banking on those worries leading to millions of people - parents, job-hunters and more - paying for online reputation services.