Canadian insurance firm Manulife has reportedly cut a depressed woman's benefits after seeing photos of her on Facebook showing her as "happy".

Nathalie Blanchard said that she cannot understand how Manulife was able to access her account because she had adjusted her privacy settings so that only friends could see her posts, according to CBC News.

Blanchard had been on leave from her job at IBM for over a year after she was diagnosed with depression. She claims that she was having fun on her doctor's advice in order to forget her problems.

Manulife confirmed to CBC News that the company uses Facebook to investigate clients, but claimed that it "would not deny or terminate a valid claim solely based on information published on web sites such as Facebook".

Facebook has already proved its use to human resources departments wanting to investigate potential new staff. Senior managers have also been found to use Facebook to check up on employees.

The Facebook privacy policy states that the social networking site will share information to prevent fraud or other illegal activity.

"This may include sharing information with other companies, lawyers, courts or other government entities," says the policy.