Verizon slapped with FCC $7.4M consumer privacy violation fine

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Verizon (NYSE: VZ) is forking over $7.4 million to the FCC to resolve an investigation on how it used consumer's information for marketing purposes.

An investigation conducted by the regulator's Enforcement Bureau revealed that Verizon did not notify about 2 million new wireline customers about the opportunity to opt out of having their personal information used for marketing purposes, starting in 2006.

"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 release. "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."

Although service providers like Verizon do collect a large amount of sensitive information about their customers such as billing and location data, the Communications Act requires them to protect the privacy of that information. The FCC said that providers are also prohibited from accessing or using certain personal information except in limited circumstances like marketing, but only after getting the customer's approval. It can obtain approval through either an "opt-in" or "opt-out" process. 

Besides the $7.4 million fee, Verizon said it agreed to inform customers of their opt-out rights on every bill for the next three years.

Verizon spokesman Edward McFadden told The Wall Street Journal that a notice that the FCC needed was not provided to a number of its customers before they got marketing materials for other services from the telco.

"It did not involve a data breach or an unauthorized disclosure of customer information to third parties," McFadden said via email.

For more:
- see the release
- WSJ has this article (sub. req.)

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