Verizon to pay $7.4 million after failing to protect customers' privacy rights

Verizon Communications will pay $7.4 million as part of a settlement with the Federal Communications Commission for not notifying customers of their privacy rights before using their personal information for marketing purposes, the FCC says Wednesday.  

Regulators discovered that Verizon failed to alert around two million customers of rights that include telling customers how to "opt out from having their personal information used." Verizon will now tell customers of their opt-out rights on each bill they receive, not just the first bill. 

"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," Travis LeBlanc, acting chief of the FCC's Enforcement Bureau, says 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."

The FCC learned that, beginning in 2006, Verizon did not tell certain customers that their personal information was being used in marketing campaigns. Typically, phone companies are prevented from accessing or using personal information. Marketing is one of the few exceptions to this rule, the FCC notes, but only when companies get customer approval or give them the chance to opt out.

Verizon did not do this, the FCC says. While most customers received opt-out notices upon receiving their first Verizon bill, approximately 2 million customers received no such notice before Verizon used their information to market new Verizon services to them. 

Regulators say Verizon did not discover these problems until September 2012 and did not alert the FCC until January of 2013, instead of the requisite five business days.  

"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," Verizon spokesman Ed McFadden told Reuters. 

He adds: "It did not involve a data breach or an unauthorized disclosure of customer information to third parties. Verizon takes seriously its obligation to comply with all FCC rules, and once we discovered the issue with the notices we informed the FCC, fixed the problem and implemented a number of measures to ensure it does not recur." 

The FCC says Verizon's $7.4 million payment to the US Treasury is the biggest payment in FCC history to settle "for settling an investigation related solely to the privacy of telephone customers' personal information."