FCC: Verizon To Pay $7.4M To Settle Consumer Privacy Investigation

(Eric Hauser)

Verizon is the now the owner of a title it probably would rather not have: the largest settlement related to the privacy of telephone customers’ personal information in Federal Communications Commission history. The not-so-great distinction comes as the company agreed to pay $7.4 million to settle allegations that it failed to notify millions of customers of their privacy rights before marketing services to them.

According to the FCC, an investigation by the Enforcement Bureau found that for nearly six years Verizon failed to notify approximately two million new customers of their right to opt out of having their personal information used in marketing campaigns.

Under the Communications Act, phone companies are generally prohibited from accessing or using consumers’ personal information except in limited circumstances, such as marketing. However, customers must give their approval for such uses through either opt-in or opt-out processes.

For many customers Verizon has used an opt-out process; generally sending notices to customers either as a message in their first bill or in a welcome letter. But the investigation uncovered that for several years beginning in 2006, the company wasn’t actually sending the notice.

“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,” Travis LeBlanc, acting Chief of the FCC’s Enforcement Bureau, said in a news release.

To make matters worse, the investigation found that Verizon personnel failed to notify the FCC of the issue for more than 126 days after first discovering the problem in September 2012. Companies are required, under the Communications Act, to notify the FCC of issues in the opt-out or opt-in process within five days of discovery.

A spokesperson for Verizon confirmed to Bloomberg Businessweek that the company inadvertently omitted the required notice before sending wireline customers marketing materials for other Verizon services, but that no information was ever shared with third parties.

In addition to paying $7.4 million to the U.S. Treasury, Verizon agreed to include opt-out notices on every customer bill for the next three years.

Additionally, the company will put systems in place to monitor and test its billing systems and opt-out process to sensor that customers are receiving proper notice of their privacy rights.

Verizon To Pay $7.4 Million To Settle Consumer Privacy Investigation [Federal Communications Commission]

by Ashlee Kieler via Consumerist