General Motors has agreed to pay $220 million to settle a large-scale lawsuit filed by attorneys general in 35 U.S. states and the District of Columbia. This settlement comes to end the dispute regarding the Smart Driver program, part of the OnStar service, which was accused of collecting and selling driver data without clear permission.
Data Privacy Violations and Dealer Conduct
According to the allegations, between 2016 and 2024, the company tracked the driving habits of millions of customers, including recording data such as sudden braking, speeding, and driving late at night. Instead of using this data solely to improve the driving experience, General Motors sold this information to data brokers for the benefit of insurance companies, which subsequently led to increased insurance premiums for drivers based on that extracted data.
Investigations revealed unethical practices in distribution channels; the company was providing incentives and bonuses to dealers to enroll as many customers as possible in the program. Attorneys general alleged that some dealership employees were agreeing to terms and conditions on behalf of customers without obtaining their explicit permission. A major technical error also emerged, where more than 370,000 drivers were informed they were not enrolled in the program, while their data was already being collected and sold without their knowledge.
What Changes in Practice?
Under the terms of the settlement, the company will not only pay financial compensation but will also be subject to strict operational obligations including:
- Limiting Data Collection: Committing to specific limits regarding the driving data collected from customers.
- Information Protection: Enhancing personal information protection protocols to ensure they are not leaked or misused.
- Oversight and Assessment: Subjecting data protection and privacy programs to periodic internal and external assessments.
- Dealer Training: Mandating additional training programs for dealership employees to ensure compliance with privacy standards.
It is noted that this settlement comes in the context of increasing regulatory pressure on the company, as the Federal Trade Commission (FTC) had previously banned General Motors from sharing specific data with third parties for five years, in addition to a previous settlement with the state of California worth $12.75 million.