GM Penalized by FTC for Mishandling Driver Data

Unauthorized Sale of Driver Information to Insurance Firms

Following an agreement reached previously, the Federal Trade Commission has prohibited General Motors from distributing particular customer data to third-party entities. This resolution concludes a significant instance of corporate misuse of consumer data.

A couple of years back, an exposé revealed that GM's OnStar 'Smart Driver' program was involved in collecting extensive data on users' locations and driving habits. This data was sold to intermediaries who, in turn, provided it to insurance corporations, leading to increased premiums for some drivers. 'I felt betrayed,' confessed a Chevy Bolt owner whose insurance rates surged by 21% after the data was shared. 'I wasn’t aware this information would be used to manipulate our insurance costs.'

Settlement Conditions Imposed on General Motors

As per the settlement conditions, GM is prohibited from disseminating specific consumer data to credit reporting agencies for half a decade. Moreover, the company is obligated to obtain clear consent from users before car data collection, utilization, or sharing occurs. This consent process is mandated at the point of vehicle purchase, with the customer directly asked about their data sharing preferences.

Interestingly, part of this settlement has become irrelevant as GM ceased its Smart Driver program across its brands in April 2024. The automaker has disengaged with all consumers and disbanded its partnerships with data brokers like LexisNexis and Verisk, previously implicated in selling driver data to insurers.

Legal Implications and GM's Response

General Motors has also been subjected to various legal actions, including lawsuits from states such as Texas and Nebraska. 'Our findings indicate that GM committed significant breaches of privacy laws,' remarked Texas Attorney General Ken Paxton. 'We are dedicated to ensuring they are held accountable.'

In an official statement to media outlets, GM remarked, 'The FTC has ratified the settlement agreement we reached last year. With vehicle connectivity being crucial to modern driving, we pledge to uphold customer privacy, maintain trust, and ensure transparency about our practices.'