The telco failed to tell users that they can opt out having their data sold to marketers

Sep 4, 2014 07:43 GMT  ·  By

The FCC has just handed out its largest fine ever to Verizon Communications who will now have to pay $7.4 million (€5.63 million) to settle an investigation in the way the company uses personal information about their customers for marketing purposes.

This is the largest fine that the Federal Communications Commission has received in an investigation that is related to the privacy of a telco’s customers.

The settlement comes just as the FCC is trying to appear as if it has a much tougher attitude towards the telcos amidst the entire net neutrality scandal. In recent weeks, the commission has been looking into various practices of these companies and has requested explanations over some practices, including the way they throttle the speeds of users that are supposed to have unlimited Internet access if the nearest access point is busier than usual.

Tom Wheeler has been sending letters left and right, including to Verizon, saying that he’s “deeply troubled” by the company’s decision to expand the network management policy to customers with unlimited data plans.

The fine that the FCC issued comes because, according to the Communications Act, phone companies need to protect the privacy of their customers’ information, but some of this data can be used for marketing purposes. The only restriction that is imposed is that customers need to be allowed to either opt out or opt in.

Verizon has apparently failed to notify about 2 million customers since 2006 of their privacy rights, and therefore, the possibility to opt out of allowing the company to use their personal data for marketing purposes.

“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. 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,” said Travis LeBlanc, acting chief of the FCC's Enforcement Bureau.

Wheeler has been getting criticized for siding with companies too much. In fact, ever since he came out with the plan to allow them to create so-called Internet fast lanes, he’s been called quite a few things, including a “dingo” by comedian John Oliver. Since the FCC chairman has a background in lobbying for exactly the type of companies it is supposed to help regulate now, his stance on net neutrality has been quite heavily criticized.

In fact, people disagree with his intentions to allow fast lanes to a high extent. Out of the comments the FCC received in two months of open public commentary, under 1 percent are against the concept of net neutrality, while the rest are pleading with the commission to not allow ISPs to do whatever they want.

As may already know, net neutrality means that all Internet service providers need to treat all Internet traffic in the same manner, regardless of what company it comes from. Basically, the peering deals that Netflix has signed with ISPs in order for its customers to have proper access to the heavy-traffic service wouldn’t be allowed since the Internet companies wouldn’t be allowed to throttle with their speeds in the first place.

The way the ISPs want to create fast lanes doesn’t involve any technical improvements of the networks, but rather slowing down the rest of the traffic that comes from companies that haven’t paid for access.

FCC Press Release