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Verizon to pay FCC $7.4M over privacy violations

By Claes Bell, CFA · Bankrate.com
Wednesday, September 3, 2014
Posted: 5 pm ET

You may think that you're entitled to some privacy when it comes to the personal information your mobile carrier collects on you -- who you call, when you call them and even your physical location when you make those calls. © Maksim Kabakou/Shutterstock.com.

But at least one mobile carrier will pay millions for using that information to market services to their customers without giving them the opportunity to opt out.

Verizon agreed to a $7.4 million in a settlement with the FCC for failing to inform around 2 million of its customers about their privacy rights, and for neglecting to give them an opportunity to opt out of having personal information used in its marketing schemes. The settlement is the largest ever reached by the FCC in an investigation related solely to telephone privacy issues.

The company also failed to disclose to regulators that they had messed up in a timely fashion, waiting 126 days to tell the FCC it had messed up, versus the five-day time limit given under FCC rules.

"In today's increasingly connected world, it is critical that every phone company honor its duty to inform customers of their privacy choices and then to respect those choices," said Travis LeBlanc, acting chief of the FCC's Enforcement Bureau, in a statement. "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."

Privacy a big issue for consumers
The use -- and misuse -- of consumer data is an increasingly important issue in the U.S.

Nearly two thirds of Americans (65 percent) worry about their personal information being used for marketing, according to a recent study conducted by business software company SDL. A majority (58 percent) also don't want to do business with companies that use their personal information to "make their experience better," according to the study.

While the $7.4 million fine amounts to a tiny sliver of the $120.6 billion in revenue the company took in in 2013 alone, Verizon will also be required to make changes to the way they deal with data privacy, including putting opt-out notices on every bill, and must put in place new systems to monitor its billing and opt-out practices.

What do you think? Is the fine too large, or not large enough? How important is the privacy of your personal data to you?

Follow me on Twitter: @claesbell.

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