General Motors announced Friday that it is severing ties with two data brokers following a lawsuit in which the automaker's involvement in sharing driver data resulted in higher auto insurance premiums for plaintiffs.
In a lawsuit filed March 13, Romeo Chicco of Florida alleges that GM, its connected services subsidiary OnStar, and data analytics company LexisNexis Risk Solutions violated privacy and consumer protection laws. claimed to have done so.
Chicco alleges that GM took his driving data (including information about speeding, braking, and acceleration) and shared it with LexisNexis, which then shared it with his insurance company. The complaint, filed in the United States District Court for the Southern District of Florida, seeks class action status.
The Chicco lawsuit alleges that the parties “collected false reports of derogatory and negative driving information without Plaintiff's consent. Furthermore, the unlawful transfer and publication of this data amounted to an invasion of privacy.” ”, which accuses the defendants' collective actions of causing Chicco “severe emotional distress.” ”
Legal experts say the lawsuit could be the first of many.
“Sharing data without consent is a bad thing,” said David Vladeck, a Georgetown University law professor who served as director of the Federal Trade Commission's Consumer Protection Bureau during President Barack Obama's first term. Stated. “There will continue to be litigation. This is a serious breach by the car company. It's a breach of confidentiality and there are financial implications.”
“Standard rotten stuff”
GM said it is sharing limited data collected through the OnStar Smart Driver program with insurance companies through third parties after customers consent three times. The OnStar program is optional. Monitor your driving habits to reduce wear and tear on your car and improve driving safety. Customers can unsubscribe at any time.
On Friday, GM spokesman Kevin Kelly declined to comment on the lawsuit, but sent a statement to the Detroit Free Press saying, “As of March 20, OnStar Smart Driver customer data is not shared with LexisNexis or Verisk.Customers trust that we actively evaluate our privacy processes and policies.”
Kelly asked questions about how long GM has been working with LexisNexis and Verisk, which is also a data analytics company that collects and shares data to help companies manage risk, or why GM is entering into a relationship at this time. He declined to provide further information on why he refused.
Eric Gordon, a professor and attorney at the University of Michigan's Ross School of Business, said the practice of using data for purposes not specified in the consent form is widespread in many industries.
“This isn't just car companies. The fine print of data disclosure is used by cable companies, almost every app you download, loyalty programs by retailers. … At the heart of the plaintiffs' complaint is that the law requires data collection “Resellers and data brokers have to do things in fine print and in terms that are not clear to data providers,” Gordon said.
He believes the case will be resolved, but if it goes to trial and the plaintiffs win, “we will see a surge in lawsuits” against automakers and others.
“What GM is doing here is standard rotten behavior that most companies do, and the government should step in and protect us,” Gordon said.
GM's response to the accusations
In December, Sen. Edward Markey, D-Mass., asked the Federal Trade Commission to investigate the data privacy practices of 14 automakers. “Car manufacturers collect massive amounts of data about drivers, passengers, and even people outside the vehicle, with little oversight,” Markey said.
Chicco's attorney, Ryan McBride, of the San Diego-based Cazeroni Law Group, declined to comment on the lawsuit or to contact Chicco.
According to the LexisNexis Risk Solutions website, the company analyzes data it sells to insurance companies and others to help manage risk. He did not respond to requests for comment.
Verisk did not immediately comment on the severance of ties with GM.
The lawsuit follows a recent investigation by The New York Times that found that many automakers share customer driving information with the insurance industry, leading to higher insurance premiums for some drivers. It belongs to
Decline of OnStar Service
The 36-page lawsuit alleges that on November 16, 2021, Chicco purchased a new 2021 Cadillac XT6 SUV in Delray Beach, Florida, and that the purchase agreement made no mention of OnStar, LexisNexis, data sharing, or any other privacy-related issues. It is stated that it was not.
The complaint states Chicco downloaded the MyCadillac app onto his cell phone. A few days later, Mr. Chicco received an email offering a trial of Cadillac Connected Services and his OnStar safety and security coverage. Blue He was instructed to press the OnStar button to activate the service, but he never did because he didn't need that service.
According to the complaint, the email did not mention OnStar's Smart Driver program, which www.onstar.com says “there is no fee for customers to enroll.” Available as part of Connected Access.
OnStar says, “With customer consent, we share select OnStar Smart Driver insights about driving behavior with LexisNexis and Verisk, third-party telematics exchanges that partner with some insurance carriers. “Insights about driving behavior are only shared with select insurance companies.” Insurance companies with your express consent. ”
258 drives recorded
The lawsuit alleges that Chicco never signed up for the OnStar service or consented to its driving data being shared.
But in December 2023, he called Liberty Mutual and asked why he had been denied coverage. Deputies said Chicco's information in his LexisNexis report was the culprit. According to the complaint, Chicco obtained a copy of the LexisNexis report, which contained details of approximately 258 trips he took in the Cadillac in recent months. The complaint states this included “acceleration events, hard braking events, and high speed events.”
“It is clear that the Consumer Reports are completely silent regarding these driving events,” the complaint states.
According to the complaint, Chicco said he called GM and LexisNexis several times to ask why his data was being collected without his consent. Eventually, he was told that his data was sent through his OnStar because he was enrolled in OnStar's His Smart Driver program and had an OnStar account. Chicco said he never signed up for OnStar or agreed to share his driving data.
According to the complaint, neither OnStar nor GM could tell him why OnStar distributed his driving data without his consent.
GM should stop selling data.
It's unclear how much profit GM makes from data sales. The matter was not disclosed in the company's annual financial report filed with the Securities and Exchange Commission. But Gordon said that's probably only a fraction of GM's billions of dollars in total revenue, and it may not be worth continuing.
“We made $5 million on this movie, we got $30 million from bad publicity, and now we have a legal settlement,” Gordon said. “There's a short-term solution: just stop doing it.”
But with electric vehicle adoption on the horizon, cars will become more connected and there will be more opportunities for automakers to increase revenue through data sharing, Gordon said. For example, he said, drivers' GPS locations could be sold to retailers, who could then ping drivers to stop by their stores. The key is to get clear and informed consent from drivers.
“For years, trucking companies have known where all their trucks are, when they're moving, how fast they're going, and if they're going off the highway. ,” Gordon said. “That information was valuable for safety and efficiency. But the difference was that the driver knew. This plaintiff said he didn't know, and most of us don't.”
“Your car isn't monitoring you.”
Georgetown's Vladeck agreed, adding that what people do while driving would be considered “sensitive data” by the Federal Trade Commission.
“If car companies are collecting data to make their cars safer, that's a different story. But if they're doing it to monetize it, that's why General Motors is collecting data elsewhere. “If we have to go to , that's a serious concern,” Vladek said.
In December, the Alliance for Automotive Innovation issued a statement titled, “No, your car isn't spying on you… It's keeping you safe.” According to the report, automakers primarily collect telematic driving data to support the proper functioning of vehicles, including on-board computers for safety.
The coalition's memo does not mention data sales, only that automakers adhere to privacy principles enforceable by the FTC.
“Certainly, some of these policies can be a bit confusing, taking into account incidental collections and inferences drawn from, for example, locations where the vehicle may have traveled,” the alliance memo said. Are listed. “Don't blame the lawyers, but it's about making sure manufacturers comply with notification requirements amid a growing patchwork of state privacy laws regarding things like medical information and biometrics. (Again,) (There is an urgent need for a single federal standard.)
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Staff writer Todd Spangler contributed to this report.
Contact Jamie L. Lareau: jlareau@freepress.com. Follow her on Twitter @Jalarowan. Read more about General Motors and sign up for our automotive newsletter.become a subscriber.