GM Penalized for Selling Driver Data Without Consent
The Federal Trade Commission (FTC) announced a landmark settlement on Thursday, banning General Motors (GM) from the sale of driver data to consumer reporting agencies for five years. The decision follows an FTC investigation that revealed GM had shared sensitive driving data with third-party data brokers without properly informing or obtaining consent from consumers.
The investigation uncovered that GM had collected detailed driving behavior information, including speeding habits and nighttime driving frequency, through its Smart Driver feature on OnStar Connected Services. This data was sold to brokers who created risk profiles used by insurance companies. As a result, many drivers experienced higher insurance rates without being fully aware of the data collection process. FTC Chair Lina M. Khan stated, “G.M. monitored and sold people’s precise geolocation data and driver behavior information, sometimes as often as every three seconds. With this action, the F.T.C. is safeguarding Americans’ privacy and protecting people from unchecked surveillance.”
Consumer Consent and Privacy Violations
According to the FTC, millions of vehicles were affected by GM’s sale of driver data practices, with many drivers unknowingly enrolled due to a confusing sign-up process. The federal regulator criticized GM for failing to adequately disclose the extent of data collection, which included sensitive metrics like hard braking incidents, late-night driving, and speeding. This information was sold to consumer reporting agencies, which used it to generate credit reports that impacted insurance rates and coverage decisions.
In a statement, the FTC emphasized the importance of transparency, noting that GM’s practices violated consumer trust. The settlement requires GM to improve data access and privacy controls for its customers. Drivers will now be able to access and delete collected data more easily and disable location tracking if desired.
GM’s Response and Future Implications
Following the controversy, GM discontinued the data collection program, citing customer feedback as a primary reason. Additionally, the company stopped the sale of driver data to data brokers, including LexisNexis Risk Solutions and Verisk, which had previously collaborated with the insurance industry. While the five-year ban prohibits GM from sharing individual driver data, it allows the company to share anonymized data for purposes like road safety research.
This settlement marks a significant step in regulatory oversight of corporate data practices. Under the agreement, GM must prioritize consumer privacy and adopt measures to prevent similar breaches in the future. As Lina M. Khan concludes her tenure as FTC chair, her leadership has set a precedent for stronger enforcement of privacy protections in the tech and automotive sectors.
