General Motors (GM) and its OnStar division have been barred from selling customer-driving data for the next five years. This decision follows an investigation that revealed GM was sharing sensitive customer information without proper consent.
How Did This Happen?
This became public after it was discovered that GM had been gathering detailed information about how customers drove their vehicles. This included how fast they accelerated, how hard they braked, and how far they travelled. Rather than keeping this data private, GM sold it to third parties, including insurance companies and data brokers.
Many customers did not know about this practice and complained when their insurance premiums suddenly increased. According to reports, one customer complained that they had enrolled in OnStar to enjoy its tracking capabilities, not to have their data sold to third parties.
FTC's Allegations
The Federal Trade Commission (FTC) accused GM of misleading customers during the enrollment process for OnStar’s connected vehicle services and Smart Driver program. According to the FTC, GM failed to inform users that their driving data would be collected and sold.
FTCP Chair Lina Khan said GM tracked and commercially sold the extremely granular geolocation data of consumers and drove behaviour as frequently as every couple of seconds, and the settlement action is taking to protect privacy and prevent people from being subjected to unauthorized surveillance, according to officials.
Terms of Settlement
Terms of the agreement require GM to:
1. Explain clearly data collection practices.
2. Obtain consent before collecting or sharing any driving data.
3. Allow customers to delete their data upon request.
Additionally, GM has ended its OnStar Smart Driver program, which was central to the controversy.
In a brief response, GM stated that it is committed to safeguarding customer privacy but did not address the allegations in detail.
Why This Matters
This case highlights the growing importance of privacy in the digital age. It serves as a warning to companies about the consequences of using customer data without transparency. For consumers, it’s a reminder to carefully review the terms of services they sign up for and demand accountability from businesses handling personal information.
The action the FTC takes in this move is to make sure that companies give ethical practice priority and respect customers' privacy.
