Verizon will pay the Federal Communications Commission $7.4 million as part of a settlement over the company’s failure to adequately inform and obtain consent from customers before using their personal information to develop thousands of tailored marketing campaigns. Officials say this fine constitutes the largest consumer privacy settlement in FCC history.
The settlement arises from claims that the company – over a period of several years – violated the privacy rights of more than two million of its customers. Specifically, the FCC argued that the company did not notify customers that their personal information would be accessed and used to generate marketing campaigns, nor did the company give instruction regarding how customers could opt out of such practices.
“The FCC found that Verizon failed to inform consumers of their privacy rights, including how to prevent their personal information from being used for marketing purposes,” EPIC wrote in an announcement today.
Verizon has also agreed to a compliance plan in which it will notify all of its customers of their right to opt out of the tailored marketing program on every bill for the next three years. They must also designate a senior corporate manager as a compliance officer; implement a process for immediately reporting to the Compliance Officer any problems detected with opt-out notices, regardless of size; and develop and implement a three-year compliance plan.
“In today’s increasingly connected world, it is critical that every phone company honor its duty to inform customers of their privacy choices and then to respect those choices,” said Travis LeBlanc, Acting Chief of the FCC’s Enforcement Bureau. “It is plainly unacceptable for any phone company to use its customers’ personal information for thousands of marketing campaigns without even giving them the choice to opt out.”
FCC rules prohibit phone companies from collecting the personal information of subscribers, not including location and billing data, which they are required to protect under the Communications Act of 1934. However, phone companies are allowed to collect sensitive data about their customers for marketing purposes so long as collections are based on an opt-in or opt-out process. Should a problem emerge in these processes, the company must inform the FCC within five days.
Verizon chose the opt-out route, but an FCC investigation showed that the company failed to include an opt-out notice in their billing or welcome letters to more than two million customers starting in 2006. Furthermore, Verizon employees did not notice the lapse until September 2012 and then did not inform the FCC for an additional 126 days.
Verizon collects information about collected customer services and calling habits, such as how many calls a customer makes, what services the customer subscribes to, the destination or numbers called and the customer’s location at the time of the call.
Image via Timothy Vollmner – Flickr Photo Stream
