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Verizon to pay $7.4 million to settle FCC privacy investigation

Verizon agrees to pay $7.4 million to settle FCC investigation into improper use of customer data
FCC says Verizon failed for years to send opt-out notices to new customers about use of personal data

Verizon Communications Inc., agreed to pay $7.4 million to settle federal allegations that the company improperly used customers' personal information to market new services to them.

The privacy violations lasted from 2006 until last year and involved about 2 million Verizon phone customers who did not get required notices allowing them to instruct the company not to use their information for marketing purposes, the Federal Communications Commission said Wednesday.

In addition to making the cash payment, the largest ever in an FCC case solely about phone privacy, Verizon agreed to take extra steps for the next three years to inform customers of their privacy rights.

“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.

Phone companies generally are prohibited from using personal data, such as when and to whom calls are made, for marketing purposes without a customer's approval, the FCC said.

Approval can come through a notice from the company about how it might use the information that gives the customer the ability to opt out.

Verizon uses an opt-out process that involves sending a notice in a welcome letter to new customers or in their first bill. But starting in 2006, Verizon failed to send those opt-out notices to about 2 million residential and business customers, the FCC said.

Verizon employees learned of a potential problem in September 2012 and didn't tell the FCC until Jan. 18, 2013. The company was required to notify the agency within five business days.

Verizon spokesman Edward McFadden said the failure to send the notices was unintentional and "did not involve a data breach or an unauthorized disclosure of customer information to third parties."

“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," he said.

The company informed the FCC once the problem was discovered, fixed the problem and took steps to make sure it doesn't happen again, McFadden said.

Verizon agreed to notify customers of their opt-out rights on every bill for the next three years and monitor its billing systems to make sure the notices are included, the FCC said.

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Copyright © 2014, Los Angeles Times
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