FTC Proposes Settlement With GM and OnStar for Sharing Drivers' Data Without Consent
The FTC trumpeted two big enforcement actions as part of a flurry of announcements in the days before Monday's inauguration of President-elect Donald Trump. The FTC on Thursday proposed a nonmonetary settlement with GM and OnStar over allegations the companies collected and sold consumers’ location data without proper consent. The commission on Friday announced a settlement of $20 million with the maker of the videogame Genshin Impact over allegations of violating a child privacy law. The FTC also revealed a long-awaited update to children’s online privacy rules Thursday (see 2501160068).
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GM’s enrollment for OnStar and Smart Driver data collection was “confusing and misleading,” the FTC said. “In fact, some consumers were unaware that they had been signed up for the Smart Driver feature.” The companies failed to inform consumers that driver data, including information on hard braking, late-night driving and speeding, would be sold to consumer reporting agencies, the FTC said, citing violations against Section 5 of the FTC Act.
Under the settlement, the companies would need to secure “affirmative express consent” when collecting vehicle data in the future. Moreover, they would be banned from “disclosing consumers’ geolocation and driver behavior data to consumer reporting agencies for five years.” The proposed settlement includes data deletion provisions and limits on data collection.
The commission voted 3-0-2 to open the consent agreement for public comment, with Commissioners Melissa Holyoak and Andrew Ferguson recorded as absent. If the consent order is finalized, the companies would face civil penalties up to $51,744 per future violation. An attorney for the companies didn’t comment Friday.
“Secretly collecting and sharing driver location data is a terrible practice that can cause real harm to unsuspecting consumers," said Justin Brookman, Consumer Reports technology policy director. "We are encouraged that the FTC is taking action under existing consumer protection law to put a stop to it. But because of ambiguity in the law, the best way to avoid these types of abuses in the future is a strong and clear comprehensive privacy law that restricts unwanted data sharing by default."
The complaint against the makers of Genshin Impact alleged that the game was marketed to children and collected personal information from them in violation of the Children’s Online Privacy Protection Rule (COPPA). In addition to the $20 million penalty, the game's makers will block children under age 16 from making in-game purchases without consent from parents as part of the settlement, among other required changes, the FTC said.
“Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Companies that deploy these dark-pattern tactics will be held accountable if they deceive players, particularly kids and teens, about the true costs of in-game transactions.”
The commission voted 5-0 to refer the complaint and stipulated order to DOJ, with Holyoak and Ferguson concurring in part and dissenting in part.