Verizon settles FCC consumer privacy investigation

The company failed to notify telephone customers that they could opt out of targeted marketing campaigns, the agency said

Verizon Communications will pay $7.4 million to settle U.S. Federal Communications Commission allegations that the company failed to notify millions of customers that they could opt out of having their personal information used in internal marketing campaigns, the FCC has announced.

The settlement is the largest in FCC history related to telephone customers' privacy, the agency said in a news release.

An investigation by the FCC's Enforcement Bureau found that Verizon failed to notify approximately 2 million new customers, on their first invoices or welcome letters of their privacy rights, about how to opt out of having their personal information used in marketing campaigns, the FCC said. Over the course of several years, Verizon accessed their personal information for marketing campaigns before informing customers of their opt-out rights, the agency said.

In addition to the monetary settlement, Verizon has agreed to notify customers of their opt-out rights on every bill for the next three years, the agency said.

"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," Travis LeBlanc, acting chief of the 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."

The marketing campaigns did not involve Verizon sharing personal information with other companies, Verizon said in a statement.

"The issue here was that a notice required by FCC rules inadvertently was not provided to certain of Verizon's wireline customers before they received marketing materials from Verizon for other Verizon services that might be of interest to them," the company said in a statement. "It did not involve a data breach or an unauthorized disclosure of customer information to third parties. Once we discovered the issue with the notices we informed the FCC, fixed the problem and implemented a number of measures to ensure it does not recur."

Telephone companies collect personal information such as billing and location data, and the U.S. Communications Act requires them to protect the privacy of that information, the FCC said. The law generally prohibits telephone carriers from using certain personal information except in limited circumstances, including marketing, but only after getting the customer's approval, the agency said.

Verizon has used an opt-out process for many customers by sending notices either as a message on their first bill or a welcome letter, the FCC said. However, beginning in 2006 and continuing for several years, Verizon failed to generate the opt-out notices, the agency said.

Verizon failed to discover the problem until September 2012, then didn't notify the FCC of the problems until January 2013, the agency said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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