In early September 2014, Verizon Communications, Inc. agreed to pay $7.4 million to settle an investigation by the Federal Communications Commission (FCC) into Verizon’s alleged violation of customer privacy rights. The FCC announced that this is the highest fine paid by settlement over investigations into privacy violations of phone customers’ personal data.
The FCC tries to protect consumers from at least some annoyance. For example, phone companies are not allowed to share customers’ personal data, except to a limited extent for marketing with customers’ prior informed consent. Consequently, phone companies must give new customers notice and “opt out” information so they can reject the otherwise inevitable flood of marketing materials about additional products and services. Furthermore, the FCC investigates and punishes violations of those requirements, eventually.
Verizon Communications, Inc. is an American broadband and telecommunications company that also conducts business globally, employing 74,000 employees and earning $81 Billion annually (2013). Verizon discovered the FCC’s ability to investigate and punish (heavy on the punishment) when it failed to notify approximately 2 million new landline customers of their right to “opt out,” leaving customers’ private information available for literally thousands of marketing offers. Fortunately, no wireless customers were affected and Verizon did not transfer landline customers’ private personal data to third parties. The notification failure stretched from 2006 into late-2012. Verizon was allegedly aware of the problem in late 2012 and reported it to the FCC in mid-January 2013, 126 days later because…well…what’s the rush?
In addition to the cash payment, Verizon agreed to a 3-year compliance plan. According to the plan, Verizon will notify customers of their opt-out rights on every bill for the next 3 years. Verizon also agreed to put systems in place to monitor and test its processes for billing and “opt out” notices to ensure customers’ receipt of adequate notices. Finally, Verizon must report related problems “that are more than an anomaly” to the FCC within 5 business days and must report any noncompliance.
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