FCC Issues Largest Ever Fine To Verizon For Hiding Ability To 'Opt-Out' Of Selling Customer Info To Marketers

from the still-a-slap-on-the-wrist dept

The big telcos don’t exactly have particularly good records protecting your privacy. And now the FCC has reached an agreement with Verizon to pay the largest ever fine to the FCC to settle a long-term practice of hiding the fact that customers could opt-out of having their private info shared with marketers. Even as the “largest” ever such fine, it’s still pennies for Verizon at $7.4 million.

At issue was that Verizon is required to have either an opt-in system for sharing information on users with marketers or an opt-out system. But if they have an opt-out system, they have to clearly tell new customers that they can opt-out and how to do so. Not surprisingly, Verizon chose the “opt-out” method… and then conveniently left out the part where they tell customers they have the right to opt-out. And they did this for several years. To approximately two million customers. Oh, and to make matters worse, the company is required to let the FCC know of any violation within five business days of becoming aware of it. Verizon finally “noticed” it’s own failure to tell people about the opt-out in September of 2012, but forgot to say anything to the FCC for… 126 days. That’s a bit longer than five.

For many of its customers, Verizon has used an opt-out process, sending opt-out notices to customers either as a message in their first bill or in a welcome letter. During its investigation, the Enforcement Bureau learned that, beginning in 2006 and continuing for several years thereafter, Verizon failed to generate the required opt-out notices to approximately two million customers, depriving them of their right to deny Verizon permission to access or use their personal information for certain marketing purposes. Moreover, the Enforcement Bureau learned that Verizon personnel failed to discover these problems until September 2012, and the company failed to notify the FCC of these problems until January 18, 2013, 126 days later. Under the terms of the Consent Decree the FCC announced today, Verizon must take significant steps to improve how it protects the privacy rights of its customers. For example, Verizon will now include opt-out notices on every bill, not just the first bill, and it will put systems in place to monitor and test its billing systems and opt-out notice process to ensure that customers are receiving proper notices of their privacy rights. Any problems detected that are more than an anomaly must be reported to the Commission within five business days, and any noncompliance must be reported as well.

To resolve the matter, Verizon will pay $7.4 million to the U.S. Treasury, which is the largest such payment in FCC history for settling an investigation related solely to the privacy of telephone customers? personal information.

The fine is a slap on the wrist, but this once again suggests the rather cavalier attitude the telcos have concerning privacy and the ways in which they clearly are not particularly concerned about obeying FCC regulations.

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Companies: verizon

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Comments on “FCC Issues Largest Ever Fine To Verizon For Hiding Ability To 'Opt-Out' Of Selling Customer Info To Marketers”

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32 Comments
That One Guy (profile) says:

Would be interesting to see how much money they got from selling the data over that period of time, somehow I get the feeling they at worst came out slightly behind, if not broke even, though I suspect they likely made quite a bit more than they’ve been fined, making this little more than a pathetic flexing of authority on the part of the FCC, to try and look like they’re actually interested in helping protect the public, without actually having to do so.

Mason Wheeler (profile) says:

Re: Re: Re:

Precisely. At that scale, this is exactly what the article said: nothing more than a slap-on-the-wrist “punishment” for them. Now if it had been $7 billion, that might have gotten the message across that this sort of exploitation is unacceptable and if you do it anyway, you will truly get hurt for it. But alas, it was not to be…

Mason Wheeler (profile) says:

Re: Re: Rich people don't use Verizon?

No, but to point the correlation back in the other direction, it certainly does seem that a disproportionate number of evil people–and especially of evil people who get away with it–are rich.

“A criminal is a person with predatory instincts without sufficient capital to form a corporation.”
— Howard Scott

John Fenderson (profile) says:

Re: Re: Re: Rich people don't use Verizon?

That’s one of my favorite quotes.

“it certainly does seem that a disproportionate number of evil people–and especially of evil people who get away with it–are rich.”

It might seem that way without it being true because evil people who are wealthy are much more likely to actually affect your life than evil people who are poor.

However, I happen to strongly suspect that the percentage of people who are evil is greater in the “rich” group than “poor” group. I suspect this for two reasons:

1) You pretty much have to engage in unethical or illegal behavior in order to amass a huge amount of wealth. It’s how the system is designed, and

2) Evil is attracted to power, and in our society money is power. Therefore, on the whole, evil people are more likely to desire great wealth enough to work to attain it than non-evil people are.

That One Guy (profile) says:

Re: Re:

Not even close to large enough, no. If the FCC was interested in actually punishing Verizon over this, my suggestion would be to find out how much they made selling that data, and then fine them ten times that amount, with half of that being paid out to the affected Verizon customers.

That way the fine amount is directly connected to the profits Verizon made from ‘forgetting’ to tell their customers how to opt out, it’s large enough to completely eliminate any gain they might have made from doing so, and those affected get at least some repayment for what’s been done.

John Fenderson (profile) says:

Re: Re: Re:

Corporate fines should be levied (and reported) in terms of percent of yearly gross income rather than an absolute dollar figure. Want to levy a fine that actually stings Verizon? Make it 20% of last year’s gross.

At the very least, journalists need to stop reporting the absolute dollar amount and report fines in terms of % of income. It’s the only measure that actually matters.

That Anonymous Coward (profile) says:

Perhaps it is time we shoot anyone who suggests it be made out-out.
The default setting on most anything should be opt-in.
Telemarketers tell tales about how people WANT their calls, so put your money where your mouth is make those customers clearly opt in.
My tears when that industry collapses won’t be real.
Charities, Political, etc etc… make that all opt-in.

I bet you those notices would be in every bill, free texts every month, and they would offer extras to get people to do it. It is clear they failed at their responsibilities with opt-out so fine them every damn cent they earned for that failure and set the default to opt-in.

Why anyone thinks that opt-out is the best possible practice is beyond me. You are forcing customers to jump through all sorts of hoops and high pressure tactics to not do it. With opt-in those who are interested would have a super easy way to say yes by all means call me at dinnertime and tell me all about how you can fix this problem in my life.
Sure call me 14 times a day and tell me the lies about how this candidate wants to sell the country to the russians.

Trick someone into doing it… the fine is every cent you earned from selling that data that year… twice.

Problem – actual solution.

I have a right to not be bothered if I don’t want to be.
You do not have a right to sell access to bother me.

Digger says:

Re: Re:

Fine needs to be 100x anything made on data sold, for every user’s data sold that did not opt in, per day that the users data was marked as Opt-In, when the user did not request it independently. No “if you do not respond, you will be marked as opt-in”. It has to be “If you wish to opt-in, please contact us so we may send you a bottle of KY before you bend over for us.”

VerizonSucks says:

FCC needs to set rules to make those "Opt-In" only

Don’t allow anything like that to happen in the first place.
Modify all programs like that for Cellular / Internet / Telephone companies to be Opt-In, with everyone’s status immediately reverted to Opt-Out, then wait for the users to call to be added back if they wish to be.

That’s the only “right” way for things to happen.

Anonymous Coward says:

The Fine Is Not the Punishment

Fines like this traditionally signaled plaintiff class action lawyers that it was time to start looking for a sympathetic name plaintiff. That’s where the real pain came from, and that helped keep companies honest – or at least above-board.

Of course, since the Supreme Court gutted class actions in the name of arbitration, this likely no longer applies. I’ll bet Verizon didn’t “accidentally” forget to include a class action waiver / arbitration clause in their form contracts.

John85851 (profile) says:

No problem, I have $7.4 in my wallet

“$7.4 million fine? I have that in my wallet. Do you have change for a $10 million bill?” said Verizon.

There are two ways this will play out:
1) This fine is so low (which it is) that they’ll consider it a cost of doing business, pay it, and keep doing it until they’re caught again… and pay that fee.
2) They take the fine seriously and charge their customers more money to cover this “loss”.

Eldakka (profile) says:

$7.4million, /6 years /2million customers

=$0.62 per person per year.

The fine should be at a minimum, $1 per user per year, plus a multiplier of how many times over the required reporting limit they are, 126days/5days

= 25.2

5 days is pretty tight tho, so give them a grace period of 1 month, so it’s (126 days – 30 days) /5

= 19

final fine 1*2000000people*6years*19 = $228million.

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