Verizon to Pay FCC Record $7.4 Million To Resolve Privacy Violation Investigation

Sept. 3 — Under a consent decree, Verizon Communications Inc. will pay $7.4 million to resolve a customer privacy violation investigation by the Federal Communications Commission—the largest customer privacy settlement the regulator has ever reached—the FCC announced in a Sept. 3 statement.

The company failed to notify approximately 2 million new wireline customers that they could opt out of letting Verizon use their personal information to market them Verizon services, the FCC Enforcement Bureau (EB) said in the statement.

In addition to the payment, Verizon has agreed to notify its customers of their privacy rights on every billing statement for the next three years and “put systems in place to monitor and test its billing systems and opt-out notice process,” the EB said.

Failure to Provide Opt-Out Notice

“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,” EB Acting Chief Travis LeBlanc said in the 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 Sept. 3 press release.

The Verizon statement said that the company takes compliance with FCC rules seriously, already has fixed the issue and has taken steps to ensure the same notification problems do not occur again.

“It did not involve a data breach or an unauthorized disclosure of customer information to third parties,” the company said in the statement.

Investigation

Under the Communications Act, companies are required to notify customers that they can choose not to have their personal info used for marketing purposes. Verizon has traditionally fulfilled this requirement through notices as part of their welcome letters or on a first billing statement to new customers, the FCC said.

“When that process is not working properly, the company must report the problem to the FCC within five business days,” the FCC said.

“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,” the FCC said.

Verizon personnel didn't discover the issue until 2012, however, but the FCC was not notified for 126 days after that discovery, the EB said in the statement.

Full text of the commission's order adopting the consent decree—with an unsigned copy of the consent decree attached—is available at http://op.bna.com/pl.nsf/r?Open=dapn-9nnjld.