FTC finalizes GM punishment over driver data sharing scandal

After reaching a proposed settlement last year, the FTC has banned General Motors from sharing specific consumer data with third parties, TechCrunch reported. The finalized order wraps up one of the more egregious cases of a corporation collecting its customers’ data and then using it against them. 

Two years ago, the New York Times report released a report detailing how GM’s OnStar “Smart Driver” program collected and sold detailed geolocation and driving behavior data to third parties, including data brokers. Those brokers in turn sold the data to insurance providers, which jacked up the rates for some drivers based on the data. “It felt like a betrayal,” said a Chevy Bolt owner that saw his insurance rise by 21 percent based on the data. “They’re taking information that I didn’t realize was going to be shared and screwing with our insurance.”

According to the terms of the settlement, GM is barred from sharing specific user data with consumer reporting agencies for a five year period. The automaker is also required to request user permission before collecting, using or sharing vehicle data with any third party. It must do that when a consumer purchases a car at a dealership, with the customer asked in person whether they agree or not with the data collection, GM said. 

Some of the settlement is moot as GM stopped its Smart Driver program for all brands in April 2024. The company unenrolled all customers and stopped its third-party relationship with LexisNexis and Verisk, the brokers that sold driver data to insurance companies. 

GM faced other actions over the data collection, including lawsuits from Texas, Nebraska and other states. “Our investigation revealed that General Motors has engaged in egregious business practices that violated Texans’ privacy and broke the law. We will hold them accountable,” said Texas AG Ken Paxton at the time. 

In a statement to TechCrunch, GM said: “The Federal Trade Commission has formally approved the agreement reached last year with General Motors to address concerns. As vehicle connectivity becomes increasingly integral to the driving experience, GM remains committed to protecting customer privacy, maintaining trust, and ensuring customers have a clear understanding of our practices.” 

This article originally appeared on Engadget at https://www.engadget.com/transportation/ftc-finalizes-gm-punishment-over-driver-data-sharing-scandal-130012313.html?src=rss